How Much Can You Borrow? Knowing how much you can afford is an important fi rst step before even visiting your fi rst open home. Home buying can be a very emotional process, so before you fall in love with a house, it is important that you have a full, rational overview of your fi nancial situation. Adviser Tip: “Mortgage Express has several mortgage calculators on its website, where you can calculate what your repayments would be according to specifi c criteria. There’s one for home loan repayments, split loans, extra repayments and even one to help you work out your borrowing power.” www.mortgage-express.co.nz An adviser will help you drill down your full fi nancial position in more detail, but here are some of the factors you need to take into account: • Income - Salary or wages (net) - Rental income - Other income • Expenses - Existing debt, credit card or motor vehicle repayments - Living expenses: childcare, groceries, insurances, petrol, power, phone, water rates, land rates etc Adviser Tip: “If you are single or in a relationship, what would happen if you or your partner is made redundant, becomes ill or cannot work for another reason? Or, if you are planning to have a baby, could you afford for one partner to stay off work for a period of time to care for your child? Think about how much debt you are comfortably prepared to take on, and seriously consider insurance to protect yourself.” Pre-approval Put simply, pre-approval is conditional approval from a lender that they will lend you up to a certain amount for your home purchase. It generally lasts for 180 days, is free to set up and easy to renew. We recommend that you have pre-approval before starting on your property search, as it gives you a very clear indication of how much you can reasonably afford to borrow and how much a lender is prepared to offer. It means you know exactly what your limit is when shopping around. It also speeds up the process considerably once you do fi nd a house that you’d like to make an offer on. Ensuring you have a pre-approval offer, and also negotiating for a competitive interest rate is where a mortgage adviser can help you. We work with many lenders every day, so are well versed in negotiating a deal that will best suit you, as we can easily compare between different lenders.
Home Buyers Finance Guide V2
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