Finance For Your Purchase

08 Jun 2015| Posted by: Geoff Baldwin

Your real estate purchase should be the beginning of a dream - not a nightmare of trying to keep up the monthly mortgage repayments. Therefore the golden rule is not to over-commit yourself financially and as a rule of thumb, you should check that your total monthly financial commitments (including your home mortgage repayment) do not exceed a maximum of 35 - 40 percent of your monthly income. There are many avenues for housing finance to suit your particular needs. The amount you can borrow is measured by your income, your other financial commitments and the size of your cash deposit available. In addition, you will need to set aside an amount to cover the normal additional expenses in purchasing a property, as outlined in the section “How To Calculate Buying Costs”. The level of finance for housing is directly related to the level of interest rates and these rates are very competitive between lenders. This competition means that the borrower can take advantage of the most competitive rates and most suitable loan packages on offer. The source of your finance will depend on the size of your cash deposit and your ability to satisfy the various rules and regulations which govern the lending of the respective financial institutions. For example, some lending institutions are more liberal in their willingness to accept both husband's and wife's incomes, and the purpose for which the property is be purchased, i.e. investment or owner occupation. First homebuyers will find that they have the widest range of lender choices, because of the number of Government subsidised mortgages available to them. Be prepared to provide evidence of your deposit saved, taxable income and other commitments. This will assist in establishing exactly how much you can afford to borrow and is also required when your written application for finance is being completed for presentation to the chosen lending institution.