Do you Want to Know How Much you Can Borrow for a Mortgage Home Loan?
Our borrowing power calculator provides an initial estimate of how much you can borrow based on your current circumstances.
It is a helpful step to do before you contact your mortgage broker. You can see the effect of different loan periods and interest rates on the following:
By entering the length of the mortgage, your salary (plus additional income if you intend to co-purchase), your expenses, and the number of dependents you may have, this calculator will measure your borrowing power based on your earnings and other financial commitments.
Check that you enter realistic numbers to get a more exact picture of what you can modestly and comfortably afford to borrow. You’ll not want to end up financially overstressed or working extra hard to keep up with your repayments.
Definition of Terms:
DISCLAIMER: What this calculator will show you are information for approximate estimated values, depending on inputs keyed in and detailed assumptions.
Definition of Borrowing Power
It’s what lenders used to define how much you can borrow based on your financial condition. The factors affecting your borrowing power are the following: how much you earn, how much you’ve saved as a deposit, and how much you owe or repay for other debts like credit cards, and whether you have a guarantor.
How can you Increase your Borrowing Power?
It is based primarily on two things: the amount of your income and what you spend your money on or your expenses. We take into account items like utility bills, school fees, rent, and debt repayments. We also include your grocery and entertainment expenses to guarantee that you’d be able to repay the loan amount over time with your financial situation and lifestyle.
These are some tips to help increase your borrowing power:
What Affects your Borrowing Power other than Income and Expenses?
Other factors can affect your borrowing power aside from income and expenses. For instance, check your debt limits such as personal loans and credit cards. Even though you’ve fully paid your credit card, your home lender might still consider these limits as probable debt, affecting the amount of money they’ll be willing to lend you.
One that can also affect your borrowing power is your debt repayment history. It might be a good idea to get a copy of your credit report for your credit history before starting your application. Once you checked that it’s not as strong as it should be, it’s best to pay down personal loans and credit cards, or perhaps, close loan and credit accounts that you’re not using.
Your employment status is also one factor. It might be more complicated to show your earnings if you are self-employed or an entrepreneur.
How do Dependents Affect your Borrowing Power?
It is our responsibility as parents to raise and support our children and this undeniably involves some costs. As with home loans – this parenting obligation lasts for many years, and so do the costs that come with it. This is the reason why the number of dependents you support affects your borrowing power. The fact is your family is an unending important part of your life that costs money, so it has an effect to what you can afford to pay in the long run.
Will my ability to borrow be different if I am buying a home to live in or an investment property?
The amount you could borrow might go up or down depending on a number of factors related to the property you want to buy. For instance:
If I already own an investment property, will that improve my borrowing power?
Your borrowing power might go up or down depending on things like:
Will the amount I can borrow be different if I’m single or with a spouse/partner?
This can largely depend on your individual or combined income and expenses. Also keep in mind that lenders will usually take the debts of everyone on a home loan application into account when they work out how much they could lend you.
Besides the deposit, what costs do I need to budget for when buying a house?
Here’s a rundown of the costs usually involved when you buy a home:
