Why should you ACT LIKE YOU’RE PAYING A MORTGAGE before you have to? ??

Are you looking to apply for a home loan soon? ??

Did you know that the rent you are currently paying can actually go towards making up your future mortgage repayments??

Let us explain ??

Banks assess?three main factors?when looking at a home loan application:?

1. Income

2. Deposit, and

3. How you manage your money.?

Of these, how you manage your money is especially important at the moment.

All lenders will look over the last three months worth of your bank statements with a fine tooth comb to see what your current spending habits are and that you can comfortably make your mortgage repayments.?

If you are deemed to be spending more than they’re comfortable with, they will reduce the amount of borrowing you want or even decline your application until you get your spending in order.?

So the trick here is to?act?like you are actually paying a mortgage BEFORE you apply for one, and not only that but pretend you are paying it at a rate of around 8.50% as this is what the banks will “stress test” you on when working out your affordability.?

To break that down, you would look to take your current rental payments and add your regular savings amount to make up the required mortgage repayment.?

For example, if you’re paying $3,000 per month in rent, and you want to buy a home worth $850,000 you will need a home loan of $680,000 (assuming you have a 20% deposit).?

The repayment would be around $4,073 on a fixed interest rate of 5.99%.

Meaning you need to save an extra $1,073 per month (or $248 per week) on top of your rent.

However, we want to show the bank that you have accounted for the “stress-test” (remember that rate is 8.5%, meaning they test your affordability to repay the loan at around $5,229 per month), so what you actually want to be saving is $2,229 per month (or $514 per week).

So your current rent plus the extra savings is going to be the same as your future mortgage payments which will look very favourable to a bank when applying for a home loan.

Now, you might be thinking, that’s a hell of a lot extra to save on top of my rent payments! ??

But the reality is that's what paying a mortgage will be like - so work out where you can cut back on unnecessary spending like - your daily coffee, buying your lunch, eating out, gym memberships etc, and see if you can start running your “pretend” mortgage for 3 months.

Not only will you be “bank ready”, when it comes time to apply for your home loan, but you will have had a good experience of what paying a mortgage is really like - so it's not such a shock when it actually happens!

As always, you can reach out to me for a no obligation chat and we can put a plan in place to get you one step closer to getting you into your own home.

Cheers,

Rodney, Dallas, Nigel and the Agile Team!

?? 0800 1 AGILE (0800 124 453)

?? [email protected]