Lee Dastey Retail Lending Manager
Here are some of the common questions our lending team ask customers preparing to buy a home either for the first time, or for the first time in a while.
Why are you buying?
Be clear about why you are buying a property. Is it to live in, an investment, or possibly both over time? Before you start inspecting houses, make sure you have a clear objective – it will help you to make decisions along the way.
What can you afford?
The amount you can borrow comes down to what you can afford to repay. As a guide, your monthly repayments should not exceed 25 to 30 per cent of your monthly income before tax. Also factor in the extra costs that come with owning a home of your own, including council and water rates, home and contents insurance and ongoing repairs.
Are you prepared for other costs involved?
There are other costs associated with buying property and they amount to about five per cent of the purchase price. These can include legal fees, inspections, stamp duty and insurance. For example, if you pay $500,000 for a property, the additional costs will be about $25,000. You will need to have these costs covered with cash rather than relying on your mortgage to cover them, so add them to your deposit.
Do you have a deposit?
To avoid paying mortgage insurance you will need a deposit of 20 per cent of the total value of the property. For a $500,000 property, this is $100,000 plus the additional five per cent in related costs.
If you can confidently answer these questions then you're in a good position to start seriously looking for your next home, but if not, our lenders can help you find the answers you need.