Can you afford it?

Some good advice is to make some preliminary financial arrangements before you begin talking to builders or real estate agents.  Without a budget in mind you won't be able to make make the really important decisions and end up likely wasting your time and the time of others.



Pre-Approval and Loan Requirements

The best way of doing this is to seek pre-approval on a loan.

Pre-approval is an "ok" in principle to the amount of money you are seeking to borrow and usually depends on the lender being able to verify documents that support your mortgage application.

One thing to be aware of is that your lender will almost certainly conduct a credit report on yourself and your partner.  A credit report shows your credit history and outlines any previous problems you may have had repaying debts and loans.  It is sometimes possible to clean up your credit report - take a look at www.mycreditfile.com.au for details.  Cleaning up your credit report ahead of time will put you in the best position to borrow the amount of money you need.

Once you have your finances in order, it is time to speak with your mortgage broker.  We obviously recommend a Mortgage Store broker because of our commitment to training and experience in the market place.

The mortgage broker will ask you a range of questions about your income, debts and your credit history, then use that information to give you a fairly reliable estimate of your potential borrowing power

Pre-approval is free and doesn't mean you are locked into obtain a loan from your mortgage broker.

After your mortgage broker has you an estimate of your borrowing power, take the time to think about what level of finance you are comfortable with.  Some people just don't like the idea of debt whereas others finance their whole lifestyle with credit.

Remember that there is no reason why you must borrow the maximum amount for which you have been approved for. Taking less now means you repayments could be less every month, meaning that you will have to make less changes to your lifestyle.

The best way of working out what you can comfortably afford to repay is to work out what your weekly living expenses will be after you have moved into your new house.  Remember that moving can result in other cost of living changes such as spending more or less on transport to get to work.

Using out home loan calculator will help you identify how much you could potentially borrow based on your income and basic expenditure.  Use this to start the budgeting process we talked about above.

If you need any help with this, please don't hesitate to contact a Mortgage Store broker.  They are here to help you.

KB:     Q0004
Last Updated:     26 Sep 2006
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