Paul2412 Posted October 1, 2015 Share Posted October 1, 2015 I'm a little confused about the home loan calculators that can be used online to estimate how much you can borrow (including Westpac's own calculator). They are estimating that we "could" borrow significantly more than I would expect. For example, on Finder.com.au I entered in our details: Joint application No dependants My gross: $95,000 Wife's gross: $72,000 No credit card overdrafts Car loan repayments of $300 per month It says we could borrow up to $1,091,000! I assume that this is nonsense unless we have at least a $200,000 deposit and want to be so mortgaged up to the eyeballs that we would literally be on the bread line. Is this normal? We're looking at homes priced between $500,000 and $600,000 predominantly (Brisbane) and will have approx $110k - $120k for a deposit. I find it staggering that banks would be willing to lend this amount based on a fairly average median income. Am I mis-reading this? What is your experience? Quote Link to comment Share on other sites More sharing options...
Guest Posted October 1, 2015 Share Posted October 1, 2015 Nah could be right if you have no other debt obligations or dependents. Be crazy to borrow it though. Quote Link to comment Share on other sites More sharing options...
Peachy Posted October 1, 2015 Share Posted October 1, 2015 We will be doing a similar exercise shortly. That is insane! ! What are the monthly repayments? ?!! Quote Link to comment Share on other sites More sharing options...
Freckleface Posted October 1, 2015 Share Posted October 1, 2015 I've just had a quick look and think you have done something wrong on their calculator. Westpac ask for net monthly income so I am wondering if you have miscalculated that OR have incorrectly used a gross monthly figure. I calculate your wife's net monthly income as $4631 and yours as $5832 (both assume you will not be making any additional voluntary superannuation payments). Super paid by your employer is seperate and does not impact the calc. When you say no credit card overdrafts etc - do you have any credit cards etc even though you might not owe anything on them? If yes, you still need to indicate the limit on the card/overdraft etc. Even though I left your monthly expenses at 0 (which obviously they wouldn't be) the amount indicated as an indicative borrowing amount was less than the figure you got. Regardless of what figure the calculator generates the reality of an actual loan application will be different. Quote Link to comment Share on other sites More sharing options...
Seppo Posted October 2, 2015 Share Posted October 2, 2015 (edited) Paul, I did the same as you on a few of the bank websites, and was taken aback by the huge figure. While on a visit to Sydney last year, I stopped into a Westpac in Sydney, and was told I could borrow substantially less. This due to having a home in the U.S., that although would be rented out with $4000AUD net income per month, the bank claimed that this 'income' would not be counted, as there is no guarantee it would be rented on a continuous basis. Aussie pretzel logic boggles the mind sometime. Anyway, I visited an office of Aussie Home Loans in suburban Sydney, and spoke with a Brit expat who confirmed the Australian way of thinking, but came up with an amount I could borrow that made actual sense. My advice, run your figures by a broker and see what they come up with. Mortgage House is another firm that I have heard of, but there are many others. Good luck, mate!! Edited October 2, 2015 by Seppo Quote Link to comment Share on other sites More sharing options...
toOZ2012 Posted October 2, 2015 Share Posted October 2, 2015 A lot of those calculators are designed to entice customers to their banks. For $160k combined income, $1mil is not that hard at 80%(200k deposit) LVR. If I were you, I would buy two instead of one. My general rule on affordable mortgage is 3 to 4 times of annual salary. So if your wife will stop working in a few years then calculate what mortgage you'll be left at that time and see if it is less than 4 times your annual salary alone. Also, talk to a broker. Use the banks for information and brokers to get you the right deal. Quote Link to comment Share on other sites More sharing options...
Bungo Posted October 2, 2015 Share Posted October 2, 2015 The only useful mortgage calculator is the one that tells you the repayments, ignore the "what can I borrow" calculators. Work out what payments you can afford, give yourself wriggle room and borrow no more than that. Quote Link to comment Share on other sites More sharing options...
skippy79 Posted October 2, 2015 Share Posted October 2, 2015 If looking for a mortgage broker, my cousin is one on the gold coast, a very good one apparently. as bungo says, look at what you want to repay, no good looking at houses at 1mil with repayments of $6000 a month if you only want to spend say $3000 a month... Quote Link to comment Share on other sites More sharing options...
Skippy1 Posted October 2, 2015 Share Posted October 2, 2015 Would not take a mortgage out in Aus at present. Prices of property is is too risky cant see it ending well for anyone. Quote Link to comment Share on other sites More sharing options...
tina0101 Posted October 2, 2015 Share Posted October 2, 2015 We could've borrowed similar but then would have been unable to pay the amount back and live. You are best off talking to someone who will assess everything, rather than putting it in a machine. Just make an appointment at your bank and they will go through it. We did that when we started looking to buy so we knew the price range we could afford. Then we spoke to a mortgage broker, who got us a better deal on the loan. Quote Link to comment Share on other sites More sharing options...
Parley Posted October 3, 2015 Share Posted October 3, 2015 I always thought about 3 times your annual salary was the rule of thumb as to what they would lend you. Quote Link to comment Share on other sites More sharing options...
paisleylass Posted October 3, 2015 Share Posted October 3, 2015 It's not, and shouldn't be, so one-size-fits-all in Australia. Back in the UK we were restricted to borrowing far less than we could actually afford, which limited our budget considerably. As a double income no kids set up, we can clearly afford more than single income three kids families. The only upside was that we had an offset mortgage so could make unlimited overpayments, but having had to buy an ex council house in a not so great area really disadvantaged us following the GFC, and we made a loss of roughly 15% when we sold recently. All of this said, we don't want to stretch ourselves here and will borrow just enough to get the suburban 600sqm plot with pool that we want. I wanna be able to give up work before it kills me :wink: Quote Link to comment Share on other sites More sharing options...
milliem Posted October 4, 2015 Share Posted October 4, 2015 I was also shocked a what they were prepared to lend me on single income household. I didn't go that high and am very glad about that now now that it is up and running. Quote Link to comment Share on other sites More sharing options...
Quinkla Posted October 4, 2015 Share Posted October 4, 2015 Regardless of what figure the calculator generates the reality of an actual loan application will be different. Spot on. The actual amount they will lend will be vastly less than their calculators show. Quote Link to comment Share on other sites More sharing options...
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