I need some assistance from all those out there who provide loans, or any interested person. I am wondering how much I can borrow. Most of the mortgage calculators online say I can borrow $XXX thousand. But I need some simple calculations, because I have a wage, property and current mortgages.
Is there any formula the lenders use to work out how much you can borrow?
If I earn XX, I owe XX and I have equity of XX, how can I work it out?
Can I borrow 5 times my wage? Is that usual? The amount I want to borrow will be 2/3 of the equity I have. I am hoping to borrow this money on my own.
I don’t mean to be overly confusing in what I have written. I am hoping some people might do some calculations for me based on an income higher than the median income in sydney.
Thanks in anticipation!!
kay henry [
]Sorry Kay,
There is no simple formula. All the banks use different seviceability calculators and most have them on their websites for you to use.
Give your details to a broker and he will calculate the different maximums out for you – save you going to all the lenders!
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Kay
I agree with Simon, it is too hard to generalise as the borrowing capacity will vary depending on things like:
Your income
You current debts
no. of kids
credit card limits
car leases etc
rental income
etc
etcAnd it differs between banks as well. Some load the interest rates others add a buffer to you total loans and most calculate PI even if you are applying for IO.
I have found Westpac to be one of the best lenders (at the moment) in terms of serviceability.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
i have always worked on, how much do i need to live on, and everything else is surplus, and can be used to service loans, plus the income from any new investment.
then just divide that amount by the interest rate and that will give you a good idea.
eg; income 60,000/a
need 40,000/a to live
surplus 20,000/a
divide 20,000 by say 7.3% fixed for 7 years
= 274,000 roughly.Thanks folks :o)
I think it’s becoming easier for me to grasp as I think it through a little more- and thanks for your contributions. I guess I was wondering when does the bank say that, whilst you are entitled to borrow some large amoutn, that it becomes unserviceable due to large repayments. Seems some people on here have not huge incomes but a lot of IP’s! When does the bank tell you you’re too “rent reliant” and dump you? And ifytou’re dumped by one bank, how come another one will let you loan from them?
In the area of my work, disclosure is a really big deal. Do you think banks will start asking clients if they have been refused credit from other credit providers? Or is their credit checks enough, because they can see credit has been requested (and probably refused because you’re asking for it again a week later!)
I read somewhere that one shouldn’t apply for too many mortgages as loan providers are less likely to lend if you have made too many applications.
What do people think?
kay henry
Hi Kay
Being told you are rent reliant I think depends on the person you are dealing with. If you have your plan, and your bank manager understands where you’re going, and risk mitigation strategies etc., they may still be happy with it. Some banks will knock you back when you hit their lending limit, but may hide behind rent reliant tags or some other ‘excuse’.
We’ve never hit that. We’ve had ‘too aggressive’, ‘too highly geared’, ‘don’t believe the property market will continue to grow’ this was in late 2001!!!
As for being asked about being knocked back, we’ve never had that asked of us either, and my credit file has many hits on it, lots of which were then declined (at around the same time, for the same loan) for different reasons (although sometimes we never got a reason!!).
That’s why my bank manager who has since run away to the Gold Coast was awesome, once we had a few loans with him, and applied for some more, he did not even check the credit file. So no hits from him to show we’ve got the loans. We do still list it of course, but probably could get away without it when applying to another bank.
Cheers
MelDear Mel,
Another bank manager in the Gold Coast? Gee, just what that area needs [
]Mel, I appreciate your reply. In fact, I learn a lot from your posts and appreciate hearing about your personal experiences in dealing with RE. I hope you’ll continue to post on this forum. Your perspectives are valuable- I reckon a lot of newbies have been greatly assisted by your postings. I’m saying this because I think that people can at times feel discouraged from posting- for whatever reason, but I get a lot out of this forum, and I hope all those nicks who give such unselfish advice to others- with no expectations of garnering business or whatever- continue to help us out
)kay henry
Thanks for that Kay. I must admit I got a bit discouraged this afternoon when reading a post, and I think I vented too[
][].I’m just hoping I’m not one of the opinionated, nitpicker types that people keep mentioning as their reason for staying away from the forum.[
!][]Seriously though, if you want to talk to this guy about loans, he’s the best. He made things so easy for me, and I’ve told him that when I want my next loan I’ll jump on a plane and come up and see him. He told me he’ll leave instructions that I’m to be given top priority.[^]
Cheers
Mel
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