Looking to enter the property market?

There’s been a lot of talk recently about the property market, but messages like this are not always negative. For the first-time buyer, entering the market in a down economy can be the first step to maximising on investment return when the market picks up again. But knowing how much you can borrow is the first step to knowing what you can buy and when you can buy.

Borrowing power is based on a number of factors, including income, expenditure, savings and debts. Savings are important, not only for the deposit, but also illustrate your ability to service a loan. Most lenders will look for a minimum of three months genuine savings. A minimum deposit is usually around 5% of the value of the property to be purchased, but if you have not been able to save the full value of the deposit, there are options for bridging the shortfall. Ideally, you should aim for at least a 20% deposit.

Expenditure is your everyday living expenses, and debts are anything over and above your standard expenditure. High debt and poor savings is never a good match, but this isn’t always an insurmountable problem as there are options for consolidating debts into a single payment, relieving the pressure of multiple payments and additional interest costs.

If you’re interested in purchasing a property, want to discuss options for the deposit, need to confirm your borrowing power, or want to discuss options for consolidating debt, please give us an obligation free call.