close icon
search icon Apply phone 13 10 90
BlogHow to avoid over borrowing on your mortgage

How to avoid over borrowing on your mortgage

Find out if you qualify


Taking out a mortgage is a huge financial responsibility. You want to make sure from the outset that you can afford to repay your loan.

If you’re a first time homebuyer or thinking of refinancing your loan, here are some tips and tricks to avoid over borrowing on your mortgage.

Work out your borrowing power

Determining how much you can borrow for a home loan is an important first step to the home ownership journey. The amount you borrow will dictate the size of your loan repayments, which is why it’s important that you understand how much you can comfortably afford to borrow based on your income and expenses. To get a feel for how much you can borrow, you can use our borrowing power calculator.

Leave a buffer on top of your repayments

Don’t forget about changes that may happen in the future such as increases in interest rates, changes in your employment, your wedding, having a baby, or going on holidays. Factor these things in and make sure that you add at least 2-3% buffer on top of the minimum repayments. It’s better to be prepared to protect yourself in case of financial changes.  

Take time to compare loans

You shouldn’t just avoid over borrowing on your mortgage, you should also make sure that your home loan will suit your needs and preferences. To do this, take time to compare different loan products, paying particular attention to the comparison rate. This makes it easier to understand the true cost of your loan, since the interest rate, fees and charges are all rolled into one in the comparison rate.

Save for a larger deposit

Many lenders require you to come up with a deposit amounting to 20% of the value of the property you are buying. It is much better if you can save more than that. A larger deposit means you don’t need to pay for Lenders' Mortgage Insurance and you start by owning a greater amount of equity in the property.

Final word

It’s important to be realistic with your property purchase so you don’t have to sacrifice your lifestyle, your guilty pleasures, night outs, and holidays just to make your mortgage repayments.

Find out if you qualify