Two important numbers that limit your property purchase price.
When you decide to purchase another home there are two important numbers that will limit the amount you can spend. They are;
- The size of your savings, and
- The amount you can afford to spend on your loan repayments each month.
When I say the amount you can afford to repay each month, I’m not talking about what a bank or lender may calculate that you can “afford” to borrow. It’s the amount you can realistically pay out of your income, without having to deprive yourself or excessively cut back on other living costs. These maybe two very different numbers.
The best way to determine this amount is to do an accurate budget with your post settlement expenses. They may be different from today’s expenses. Deduct your expenses from your income, the amount left over is what you can afford to spend on loan repayments( with a buffer).
With your affordable repayment amount, we can calculate the loan size that you can afford with these repayments.
Knowing the loan size it is a simple calculation to add on your savings, take off 5% to cover costs and you have your maximum affordable purchase price.
The disclaimer here is that you have sufficient documented income, expenses and savings to qualify for a loan equal to or greater than the amount calculated above.
Knowing your maximum affordable purchase price at an early stage is valuable information as it sets your limits right from the start. Then, concentrate searching for properties in your price range and don’t get carried away dreaming of properties that you can’t afford.
If you know your own two important numbers and want your affordable purchase price calculated for you send an email to paul@halogenhomeloans.com.au with your numbers.
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