When you set out on the journey to building or buying a house, the first place many people start is at an online loan calculator. You might think online loan calculators are a good place to start to determine how much money you may be able to borrow from a bank or lender, but they are not.
Whilst online loan calculators can provide a broad approximation of how much you may be able to borrow, unfortunately there are just too many variables in the way lenders calculate and assess various forms of income to give you any accurate information.
Too many times we see clients come in fixated on a borrowing budget they’ve got from their bank’s online loan calculator only to find out later that they actually had the capacity to borrow more and build their house with all the extras they wanted. Often, online calculators can lead people to believe that they have no borrowing capacity and this stops them seeking further advice or following their dreams to buy or build a house.
Too many people get disappointed by the false and misleading results of online loan calculators and that is why we don’t recommend using them.
If you are looking for an accurate indication of your borrowing potential, we recommend actually seeking information from an experience bank lending officer or an accredited broker. It costs you nothing to talk to an expert about your potential borrowing power and lender options, so why not?!
Each lender has varying policies and methods for calculating different types of income such as casual income, overtime, allowances, commissions and other forms of income such as rent received from an investment property, Centrelink payments, child support income etc. With all the differences in policies amongst the lenders, the amount you can borrow can vary considerably from lender to lender as a result.
An experienced mortgage broker has access to many banks and lenders, they know how they work and about the lender’s loan products enabling the broker to find you loans that are most suited to your individual needs – and can advise you on your true borrowing potential.
Loan brokers can also advise on particular lenders that will consider your various forms of income the most favourably as well which may then allow you to borrow at a higher level if required.
By dealing with an experienced broker that has a good understanding of various lenders policies and methods they each use for calculating income, after just one meeting you will have an accurate house buying budget in mind that you can be confident will be acceptable by your chosen lender when you proceed with a mortgage application. Having an accurate budget is a must when shopping for a new home.
Clients are often very surprised when their broker shows them the differences between what various lenders will offer them.
A great starting point to finding out how much you may be able to borrow to buy or build a house is to take advantage of your lender’s or broker’s free assessment. It is simple, quick and costs you nothing.
You will be amazed at how much you can find out with a simple phone call.
They can discuss the information you provide and give you helpful advice in relation to your true borrowing potential and gaining you the best possible loan. Not only that, they should guide you through all the next steps to obtaining a great home loan; answering all your questions along the way.
If you think you may not be in a position to qualify for a home loan right now, your broker can let you know where you stand right now, and also offer some good advice on the things to focus on to help you achieve your financial goals and how to achieve them sooner.
You would be amazed how many people think they won’t qualify for a home loan only to be shocked when they are told they actually qualify for a home loan at or above their desired amount.