What portion of income should go to mortgage?

How can a mortgage repayment calculator help?

Finding out whether you are comfortable with your income-to-mortgage-payment ratio is something you can do today even before you apply for a home loan. Mortgage House has a range of tools and resources to give you all the information you need. One of these is our Mortgage Repayment Calculator. This calculator can give you an indication of what your repayments will be for individual home loans. All you need to do is enter the information in as accurately as possible, including the loan amount and interest rate, and you will discover what the repayments are likely to be. Use that information, as well as your income, to help you understand what your income-to-mortgage-payment figure will be. It is important to understand that this information is only a guide. To find out more, speak with our expert lenders today.

How can I make inroads to my home loan on an average income?

One of the best ways to make inroads into your home loan is to make additional repayments. If you can afford a larger income-to-mortgage-payment ratio than just the minimum repayment, this can be a good way to save money over the life of the loan. The same interest rate applies, but by paying off your loan sooner, you can save thousands of dollars on interest. If you are unsure whether your preferred income-to-mortgage-payment ratio can handle additional repayments, but you think it might be something you want to look at, choose a Mortgage House home loan that has a redraw facility. Redraw allows you to make additional repayments when it suits, but withdraw that extra money when you need it, for whatever reason. All you need is to ensure that the minimum repayments have been made, and any extra money or lump sum amounts you have paid can be accessed at any time. Speak with our expert lenders today to find out more.

How do I find out what loan amount I can borrow?

Another of the simple ways to discover whether you are comfortable with a potential income-to-mortgage-payment ratio is to work out how much you might be able to borrow. Once you have found a loan you think may be suitable for you, with the features and interest rate you are after, simply enter the details into the calculator below. Make sure to put your net income in, not your income before taxes are taken out, and what your preferred loan period and the interest rate of your preferred loan is. It is also important to make sure you can identify what your expenses are, as best you can, as well as your credit card or other loan repayments. As you enter your information, the figures on the right will change, giving you an indication of how much you might be able to borrow. You will also get an indication of the repayments, making it easier to understand our income-to-mortgage-repayment ratio. The calculator will give you a monthly debt repayment schedule as a default.

What do I need to know about long-term loans?

It’s always important to realise that taking out a home loan is a long-term commitment, and there will be other costs along that way that you need to take into consideration when assessing your income-to-mortgage-payment ratio.

The Australian Government’s ASIC website suggests being aware of, at the minimum:

• Home and contents insurance
• Council rates and strata fees
• Potential renovations
• Utilities and household bills
• Maintenance such as electrical and plumbing

That is why it is important to ensure your financial situation can cope with the extra costs that owning a home can incur. Building a savings buffer into your income-to-mortgage-repayment ratio can be a way to make things a little more comfortable.

Another cost that may occur is a rise in the interest rate amount you have to pay. If you have a variable home loan, your interest rate may increase, or decrease, over the life of the loan. Keep that in mind when assessing your income-to-mortgage-repayment ratio so you can cope in the future.  Use our Budget Repayment Calculator to mimic any rises in interest rates to see how it affects your repayments. Once again, see how that fits with your preferred income-to-mortgage-repayment numbers.

How can I get a better picture of my financial situation?

Working out what home loan is suitable for you can be a real balancing act. Taking your financial situation into account is one thing to consider, as is working out what kind of lifestyle you want, and what lifestyle you can afford. Building in a savings buffer, as mentioned above, is always good idea, as is working out ways to get on top of your overall financial situation. Our Budget Planner Calculator below can be a good way to get a greater understanding of your overall financial situation, and how it can be improved. We all know how difficult budgeting can be, but our calculator can make understanding it all simple.

Once you have entered as much information into it as accurately as you can, we will take all your income and expenses into account and create an easy-to-understand summary. This summary will not only tell you how much money you have to play with, but it will take all your weekly, fortnightly, monthly and even yearly finances and put them all in the same timeframe. That can help you realise how much money you may have available to pay off a home loan, or how much you may be able to put away to start saving for a deposit. You can also find out how much you can save by making small adjustments to your budget, such as making lunch instead of buying it, or quitting smoking. All these small things can add up over a year. You might be surprised. It might not be that hard to turn a monthly debt problem into a surplus solution.