How much mortgage can you afford? How to quickly figure your buying power.
Whenever interest rates rise, much of the media coverage focuses on the rise in home loan repayments and the potential slide in property values.
So a rate rise can also present opportunities to find property bargains.
Particularly for first home buyers with strong, steady incomes, this could be a time to look seriously at the property market.
Buying well can make an enormous difference to a property's investment performance. If you are buying a home to live in, please remeber that its also an investment because at some time you are likely to sell and move on.
When determining your purchasing power the old rule of thumb was that repayments on the mortgage should not exceed 30 per cent of your gross income. That's moved up to 40% now.
A way to "guesstimate" the size of the total mortgage you can afford [as determined by the lender, not you] is to multiply your income by four. This is a rough guide only for average income earners, and could be higher if your joint salaries are higher than the average.