Knowing your borrowing capacity is the most important step that you can take before starting to look for a property. You’ll find out how much you can spend and this will quickly assist you to establish what type of property you can afford.
The Lenders use two key determinants when looking at how much you can borrow: your loan Deposit and your income.
Assuming you have enough deposit to qualify for a loan, the Lender will look at how much you earn and therefore how much you can afford in repayments. This calculation also takes into account current debt (including credit cards), how many children or dependents you have, and any other ongoing commitments you may have (ie Health Insurance).
Mortgage Express Advisers have access to the borrowing capacity calculators of over 15 lenders and can calculate which lender will best suit your needs. You can also calculate your loan repayments, if you wish to consider your own budgeting requirements.
Pre-approval may also help determine which lender will be the most suitable, this may provide some confidence when negotiating on your new property.
|Interest Rate Type||Advantages||Disadvantages|
|Fixed interest rate loans||You know exactly what your repayment will be, making it easier to plan your budget
||Can be more diffi cult to make extra repayments
|Floating/variable interest rate loans||You can make a lump sum payment or extra payments at any time without penalty
||If interest rates rise, your mortgage repayments will increase as well
|Split interest rate loans||Can make extra repayments without penalties on the floating rate portion
||Rising interest rates will affect the floating portion of your loan