How much will financial institutions lend for a house?

Discover the possibilities with Find out how much you can borrow based on your current lifestyle.

A lot of factors will come into play when working out how much a financial institution is willing to lend you to buy a house. Not everyone is in the same financial situation, so this will vary from person to person .

One way lenders determine how much they can lend you for a house is by assessing your borrowing power. They will determine this by looking into your income, expenses, and other financial commitments. To know what your borrowing capacity is, you can use our borrowing power calculator.

Determining how much you can borrow

Basically, how much you can borrow will dictate how much you can afford to buy a house. A borrowing power calculator is a useful too you can use to determine your borrowing capacity when you decide to take out a loan. The result will generally be based on your salary and other income as well as your expenses.

Your sources of income can come from your salary, rental income, share dividends, and even your commission and bonuses. On the other hand, your expenses or your ‘financial commitments’ are your outgoings in the house such as your living expenses like your utility bills, rent and groceries, other loan repayments like your car loan or student loan, and also your credit card limits.

You will also need to indicate the purpose of your loan as this can greatly impact the amount you can borrow. Common loan purposes include buying a home, buying an investment property, refinancing a home, refinancing an investment property, and building a house.

Calculating your home loan repayments

Other than working out how much you can borrow from your lender, you also need to know if you can actually afford to borrow. It is your decision after all, so only borrow what you are comfortable with. One easy way to determine this is through the use of a home loan calculator. This handy tool can give you an estimate of your home loan repayments based on the loan amount, interest rate, and loan term you indicated.

With a home loan calculator, it will be easier to budget your household expenses so you can get an idea of what your outgoings will be once you sign up to a loan. Remember that the result of the home loan calculator will not necessarily be the exact amount you end up with as a repayment. This is just a reference to give you a broad estimate.

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