Estimating your borrowing capacity before buying a new-build property
Interested in buying a new-build house or apartment? Then you should estimate the amount you’ll be able to borrow, and over what period, on the basis of your ability to repay.
Before beginning your search for a new-build property to buy, it’s essential that you know how much you can afford to borrow, and therefore how much you have to spend.
It all depends on the monthly amount you are prepared to allocate to repaying your loan.
Begin by comparing the amount you currently pay in rent or the amount of rent you would have to pay to rent a similar new house or apartment.
Most banks (quite rightly) advise against committing yourself to monthly repayments of over 1/3 of your income.
The loan period is also an important factor to take into account. Some banks now grant very long loan periods of up to 30 years.
Tip: by extending the period, you can reduce your monthly payments in order to borrow more… which can useful for first-time buyers! The only downside is that you’ll be paying more in interest.
Before beginning your search for a new-build property to buy, it’s essential that you know how much you can afford to borrow, and therefore how much you have to spend.
It all depends on the monthly amount you are prepared to allocate to repaying your loan.
Begin by comparing the amount you currently pay in rent or the amount of rent you would have to pay to rent a similar new house or apartment.
Most banks (quite rightly) advise against committing yourself to monthly repayments of over 1/3 of your income.
The loan period is also an important factor to take into account. Some banks now grant very long loan periods of up to 30 years.
Tip: by extending the period, you can reduce your monthly payments in order to borrow more… which can useful for first-time buyers! The only downside is that you’ll be paying more in interest.