How much can I actually borrow?

Good news for home buyers

Tightening of this condition, loosening of that provision… if you’re a hopeful househunter confused by the current mishmash in mortgage headlines, you’d certainly be forgiven.

The past few years – particularly recent months – have left a number of home buyers puzzled, with everything from credit crunches to reduced interest rates thrown in the mix.

So what’s the go?

Put simply, The Australian Prudential Regulation Authority (APRA) propose to increase the number of buyers in the market by relaxing interest rates and lending regulations, which they announced in May 2019.

Shortly after, NAB announced a cut to their fixed-term mortgage rates by 0.2%, with other ‘big four’ banks expected to follow.

And only this week, the RBA dropped its official interest rate by 0.25%.

For the average person seeking a larger mortgage, or for the first home buyer previously met by mortgage restrictions due to income or living expenses, the changes could mean maximum opportunity by granting the approval needed to jump on current low property prices.

But just because you can, does it mean you should?

When taking out a mortgage, it pays to be ‘conservative’; borrow within your means, and do some initial groundwork. After all, the larger the mortgage the larger the repayments, and a bank won’t guarantee that you’ll always be financially able to pay these.

Don’t max out

If you’ve found a bank or a loan that’s right for you, fantastic! Just consider leaving wiggle room. On average, Australians are working increasingly longer to pay off their mortgage debt; so while current conditions may be favourable, it’s wise to futureproof your circumstances by planning for the potential of higher repayments or interest rate increases down the track.

Consider a mortgage broker

Taking out a mortgage is always daunting, but it can be stress-free! Mortgage brokers are the go-between banks and buyers, and people opt to go through a broker because they’re after more options than one, as well as a professional to do the legwork for them. A licensed broker will have knowledge of multiple banks and multiple loans – and their fees are paid by the credit provider (i.e, not you!).

If you’re after professional home loan advice or an experienced mortgage broker, get in contact with Prudential Real Estate or speak to Craig Corbett at Moneyquest.

Prudential Real Estate | (02) 4628 0033 |

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