Like most things in life, buying a home can be seen as an investment. Owning your own place can give you financial and personal stability that renting never can. However, like any investment, it’s important to do your homework first.
Most people fall back on availing a home loan to buy their dream house. And home loan affordability has become one of the biggest concerns for borrowers and this is where most people go wrong while availing a housing loan. Read on as we discuss tips to calculate home loan affordability and why undertake this activity before taking a housing loan.
Important tips to calculate your home loan affordability
If you’re thinking of availing a home loan, it’s important that you calculate your home loan affordability first. This will give you an idea of how much you can afford to borrow, and help you compare different home loan options.
Here are some tips on how to calculate it:
· Look at your income and expenses
One of the first things you need to do is take a look at your income and expenses. This will give you an idea of how much money you have available each month to make repayments on a home loan.
· Consider your other debts
Another factor to consider when calculating your home loan affordability is any other debts that you may have. If you have existing debts, such as a car loan or a personal loan, you’ll need to factor these into your total calculations.
· Use a home loan affordability calculator
There are many online home loan affordability calculators available that can help you calculate how much you can afford to borrow. Simply enter your income, expenses and other debts into the home loan calculator and it will give an estimate of how much you can afford to repay each month.
· Consult an expert
A mortgage broker is an expert in home loans and can offer advice on how much you can afford to borrow based on your individual circumstances. They can also help you compare different home loan products from different lenders.
Is calculating your home loan affordability important?
There are many reasons why it’s important to calculate your home loan affordability before availing a housing loan. Firstly, it will help you avoid borrowing more money than you can afford to repay. If you are not sure how much you can afford to borrow, you may end up taking out a loan that is too large and struggling to make the repayments each month. This could put your home at risk of being repossessed by the lender.
Secondly, calculating your home loan eligibility will also help you compare different home loan products and choose the one that best suits your needs and budget. With so many different home loans on the market, it can be difficult to know which one is right for you. This is where you need to do your due diligence.
So, what are you waiting for? Use the home loan affordability calculator to determine how much you can borrow and still live comfortably and apply for a home loan. And don’t forget, it’s always best to do your research before signing on the dotted line. By understanding how much you can afford, you can avoid nasty surprises down the road.