How Much Can I Borrow for a Home Loan? Understanding Lending Limits

Posted on December 17, 2024December 17, 2024 by Chuck N

How Much Can I Borrow for a Home Loan? Understanding Lending Limits

Buying a home is an exciting milestone, but one of the first questions that comes to mind is, “How much can I borrow for a home loan?”

If you’re navigating the home loan process for the first time, working with a trusted home loan broker in Brisbane can help you understand your borrowing capacity and find the right loan for your needs.

We’ll break down the factors that affect how much you can borrow and why working with an experienced Brisbane mortgage broker is important for first-time home buyers or anyone seeking tailored loan options.

What Factors Affect Your Borrowing Limit?

The amount you can borrow for a home loan depends on several factors. These include:

Your Income

Lenders assess your income to determine how much you can afford to repay each month. If you have a steady salary or additional income streams, your chances of borrowing more increase.

Your Expenses

Monthly living expenses, such as groceries, utilities, and other loan repayments, will be taken into account. Lower expenses mean more room for home loan repayments.

Credit History

A good credit score shows lenders that you’re reliable with money. If you have a clean credit history, you’re more likely to qualify for higher loan amounts and lower interest rates.

Deposit Size

The more savings you have for a deposit, the better. A larger deposit reduces the amount you need to borrow, which also lowers your risk in the eyes of lenders.

Interest Rates

The current interest rate also affects your borrowing capacity. Higher rates mean higher repayments, which can reduce your borrowing capacity.

Lender Policies

Each lender has different criteria for approving loans. Some lenders may offer a wide range of loan options for specific borrowers, such as first-time home buyers, while others may have stricter requirements.

How Can a Mortgage Broker Help You?

A Brisbane mortgage broker helps simplify the home loan process for you.

Expert Advice

A mortgage broker understands the market and has access to loan options from various lenders. They can match you with the right home loan based on your financial situation.

Tailored Loan Solutions

Whether you’re buying your first home or upgrading to a larger property, brokers can help you explore loan packages, like a platinum package home, that suit your needs.

Stress-Free Applications

Applying for a home loan can be overwhelming. Brokers can handle the paperwork, liaise with lenders, and ensure your home loan application is processed smoothly.

Save Time and Money

Instead of comparing loans on your own, a broker does the research for you. They can also negotiate better interest rates or highlight deals that you might not find yourself.

How Much Can You Borrow?

The actual amount you can borrow will change based on your financial situation and the lender’s criteria. However, here’s a rough idea of lending limits based on everyday scenarios:

First-time Home Buyers

With a stable income and minimal debts, first-time home buyers might borrow up to 80% to 90% of the property value.

High-Income Borrowers

If your income allows, lenders may approve higher borrowing limits, particularly if you have a good credit score.

Low-Deposit Loans

Some lenders offer loans for borrowers with as little as a 5% deposit, but this often requires lenders’ mortgage insurance (LMI).

Using a borrowing calculator or speaking with a Brisbane mortgage broker can give you a more precise estimate based on your details.

Steps to Maximise Your Borrowing Power

Improve Your Credit Score

Pay off existing debts, lower credit card usage, and avoid late payments.

Save for a Bigger Deposit

A higher deposit not only increases your borrowing power but also reduces your monthly repayments.

Reduce Expenses

Cut down on unnecessary spending to show lenders that you have strong financial discipline.

Work with a Mortgage Broker

Professional advice from a mortgage broker can help you navigate lender policies and find loans with favourable terms.

Why Choose Brisbane Mortgage Brokers?

When it comes to finding the right home loan, Brisbane mortgage brokers offer local expertise that can help you. They are available during business hours to guide you every step of the way, ensuring you understand your options and feel confident in your decision.

If you live in North Brisbane or nearby, a mortgage broker can provide face-to-face consultations and help you choose the best lender and loan options for your needs.

Ready to Find Out How Much You Can Borrow?

Understanding your borrowing limits is key to finding the right home loan. Factors like income, expenses, deposit size, and interest rates all play a role in determining how much you can borrow.

At Front Row Financial Management, we’re here to help you understand your borrowing limits and secure the right home loan for your needs.

50,000 low-deposit spots open for first home buyers and single parents

Posted on July 4, 2024July 4, 2024 by wordpress

The new financial year has kicked off with a bang for first home buyers! A whopping 45,000 more places have opened up for them under the Home Guarantee Scheme, as well as 5,000 more spots for single parents. Here’s how it could help you buy a home sooner.

Home ownership has long been the great Australian dream, but high property prices are making it tough to save a 20% deposit for many young families.

That’s where the federal government’s Home Guarantee Scheme (HGS) comes in.

It gives first home buyers a leg up into the property market even if they have just a 5% deposit, and it’s proving to be very popular.

In fact, it’s helped more than 160,000 Australians buy or build their own home since the scheme launched four years ago.

Places in the HGS are capped each year, but the good news is that an extra 50,000 spots have just been announced for the 2024-25 financial year.

Not sure what the scheme is about?

Let’s take a closer look at what’s involved by answering a few FAQs.

What is the Home Guarantee Scheme?

The HGS helps first home buyers and single parents buy a place of their own even when they have a small deposit.

Essentially, the government acts as a guarantor for the home buyer’s loan, so there is no need to pay lenders mortgage insurance, which can be a big saving on upfront costs.

In fact, not paying LMI can save buyers anywhere between $4,000 and $35,000, depending on the property price and deposit amount.

Who does the scheme help?

The HGS covers three separate programs, each with a different type of home buyer in mind.

The First Home Guarantee helps eligible first home buyers get into the market with as little as a 5% deposit. From 1 July 2024, an extra 35,000 places became available.

The Regional First Home Buyer Guarantee is dedicated to helping first home buyers who live in regional areas buy a home with just a 5% deposit. An extra 10,000 places have opened up for the 2024-25 financial year.

The Family Home Guarantee supports eligible single parents to buy a home with as little as a 2% deposit. This will help up to 5,000 families this financial year.

Am I eligible for the Home Guarantee Scheme?

You’ll need to tick a few boxes to be eligible for the HGS.

In particular, there are limits around the maximum purchase price for a home under the scheme. The upper limits vary between cities and across regional areas from state to state, and are adjusted each financial year.

One way to find out if you’re eligible is to call us and we can walk you through the various requirements.

Do all banks support the Home Guarantee Scheme?

No. Lenders choose to be part of the HGS, and while there is a reasonably wide choice of banks to pick from, not all lenders have signed up.

The Real Estate Institute of Australia says the “best way to see if you can qualify for the scheme and seek pre-approval is to speak with a mortgage broker”.

To date, mortgage brokers have secured up to 80% of the HGS placements, and we can guide you through the application process, answer any questions you may have about buying a first home, and recommend a home loan option suited to your needs from the lenders that are part of the scheme.

Call us today to find out more about buying with a 5% deposit – and zero lenders mortgage insurance. You could be in your own home a lot sooner than you expected!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Is a tree or sea change on your horizon?

Posted on June 14, 2024 by wordpress

Fresh air, no bumper-to-bumper traffic and more affordable home prices. There’s plenty of appeal in regional living, including a chance to potentially reduce your home loan.

The classic tune ‘Home among the gum trees’ is fast becoming a lifestyle anthem for a growing number of Aussies.

A surging number of city-slickers are heading to the bush or bay, new Commonwealth Bank research shows.

In fact, metro to regional relocations are now 20% higher than pre-Covid.

It goes to show that regional towns and cities have a lot going for them.

So what’s the appeal?

Along with a laidback lifestyle and the chance to see Skippy on your way to work, rather than countless sets of traffic lights, a key drawcard of regional living is more affordable housing.

Where are people moving?

The Sunshine Coast in South East Queensland is currently the nation’s most popular destination for Australian movers, securing a 16% share of net internal migration over the past 12 months.

Other popular areas outside our nation’s capital cities include the Gold Coast, Wollongong, Newcastle, Lake Macquarie, Moorabool, Geelong, the Alexandrina region, the Fraser Coast and Launceston.

Western Australia is also becoming an increasingly attractive destination with Busselton, Capel, Greater Geraldton, Northam and Albany all making their way onto various hotspot lists this quarter.

Regional home values vs city prices

Across Australia’s capital cities, the median home value is about $864,780, according to CoreLogic.

By comparison, the median value across regional markets is $626,888.

That’s a whopping $237,892 difference.

The price gap can be far bigger depending on where you’re moving from and moving to.

In Sydney, for instance, the median house value is $1,441,957. Head to regional NSW, and you could pay closer to $760,000 for a house – a saving of around $680,000!

Regional living can help cut loan repayments

Buying a more affordable home can have other flow-on benefits, such as a lower stamp duty bill.

It can also have a huge impact on home loan repayments.

For example, let’s use the above figures and pretend you’re deciding between purchasing an $864,780 capital city home and a $626,888 regional area home.

To keep things simple, let’s say you’ve saved up $173,000 for a 20% deposit on the $864,780 home – and you’ve also got extra money set aside to cover any stamp duty expenses or other fees (the exact amount would vary state to state).

Let’s also assume a home loan rate of 6.4%, which the Reserve Bank of Australia says is about the current average principal and interest variable rate, and a 30-year loan term.

On this basis, the initial mortgage for the city home would be about $692,000 and the monthly mortgage repayments on the city home would come to around $4,329 each each month.

For the regional property, your initial mortgage would be about $454,000 (assuming you put the full $173,000 towards the deposit) with monthly repayments in the order of $2,840.

That’s a monthly saving of $1,489 by moving to a regional area – extra money to spend on your home, yourself or your lifestyle.

What about capital growth?

No one can say with certainty how property values will perform in the future.

What we can do however is look at how house prices have performed across regional areas in recent years.

CoreLogic says values in regional areas have jumped 51.1% ($212,000) nationally since March 2020, compared to an average of 31.5% ($207,000) across our state capitals.

So in terms of dollar values, the capital gains across both markets have been fairly similar in recent years.

Ready for your home among the gum trees?

Okay, regional living isn’t for everyone.

Even for committed fans, moving from a capital city to a regional area calls for careful planning and research.

But if you’re hankering for a home with a more manageable mortgage, give us a call today to discuss loan options that could help you get that tree or sea change happening sooner.

How can we help you today?

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