What Salary Do I Need to Afford a 1 Million Dollar House?
A potential borrower interested in purchasing a home that costs 1 million dollars in Australia will need to make a salary of between $160,000 and $200,000 a year depending on the individual lending establishment or mortgage broker. Lenders rely on calculating applicants’ borrowing power to determine how much they will be able to afford and if they will be able to adequately make mortgage repayments, as well as their overall risk factor as a borrower.
Individuals can determine if they can afford a 1 million dollar home by multiplying 30% of their gross income by the interest rate of 2.75% per year of the loan term, then adding in the loan deposit amount they will pay.
Lenders calculate applicants’ borrowing power using their deposit size, annual income, and monthly expenses. However, there are a wide variety of factors that can influence an applicant’s borrowing power, including the following examples:
- Income-to-debt ratio
- Amount of dependents
- Financial history
- Debt and assets currently owned
- Monthly expenses, including personal expenses, bills, debt repayments, and more
If you are considering purchasing a 1 million dollar home, using an online mortgage borrowing calculator is a great way to determine if you are eligible and accurately factor in monthly expenses, debts, and assets.
At Mortgage House, our professional lending specialists are prepared to assist you with finding a home loan option that best suits your desired home! Reach out to us today to learn more about the best options available to you.