How Much Can I Borrow?

There is so much information for people to understand on Mortgages and Home Loans that it can be a daunting process, but the first thing that everyone thinks of is "How Much Can I Borrow?" writes Nicole Harrison from West Coast Solutions.

The more deposit you can put towards your home purchase, the stronger your home loan application will be. And of course the less interest and fees you’ll pay, both upfront and over the life of the loan.

Some lenders will lend you 100% of the purchase price of a property in Australia.

If you do borrow more than 80% of the purchase price of a property, your loan will be subject to Lenders Mortgage Insurance, known as LMI. LMI is an insurance, paid by the customer as a one off fee, which protects the lender in the event that the customer defaults on the loan to the extent the property has to be sold to recover the debt, and there is a shortfall.

Lenders have different criteria to decide how much you can afford to borrow, and it will depend on your income, your dependents, and your fixed outgoing expenses, such as credit card repayments

How long do I have to be in Australia before I can apply for a home loan?
There are lenders who will consider your application for a home loan as soon as you arrive in Australia, and have paid employment.

You can apply for “approval in principal” or “pre-approval” before you go new home shopping if you would like – we submit your application to the lender before you find the property, and they will approve it subject to their approval of the property you purchase. Pre-approval of your finance can sometimes give you the extra edge you need in the very fast paced Perth property market

What paperwork will I need?
The paperwork required by lenders to assess your application for a home loan is generally:

Austrac Identification or “100 point check” which can be made up quite easily with your passport and drivers license, or other pieces of identification.

Employment and Income Confirmation including;

Your most recent tax return (or tax assessment notice from overseas) to establish continuity in employment and income.

Letter from your current employer stating your employment status (part time/full time) and your gross salary, as well as confirmation you are not on probation.

Confirmation of any Centrelink income you may receive, such as Family Tax Benefit Part A and Part B.

For any other income such as share dividends or rental property income, verification such as a lease agreement will be required.

Assets and Liabilities - If you can, provide 6 months worth of bank statements (if you are new to Australia make sure you have details on all your overseas accounts). This allows the lender to see that you maintain your accounts in order, and they check for dishonoured cheques, overdue credit card payments etc

If you have purchased big ticket items such as a car since your arrival in Australia, receipts and insurance policies will add to your asset position.

For more information and advice, please contact Nicole on;
Phone - 0407 445010
Fax - 08 9304 0616
Email - nicole@westcoast solutions.com.au
Website - westcoastsolutions.com.au

Nicole and West Coast Solutions are members of MIAA (Mortgage Industry Association of Australia), PLAN Australia (Professional Lenders Association Network) and FBAA(Finance Brokers Association of Australia). Western Australia Finance Brokers Licence Number 2924.