Mortgages – How much can I afford?

If you're about to take the plunge and buy your first home, you're probably asking yourself 'how much can I afford'? This is a very personal thing to consider Try not to be influenced by what your friends or family are doing because everyone's situation is unique

It's all about striking a balance between the lifestyle you need and what you can comfortably afford To work out how much you can afford use the Budget Planner on ASIC's MoneySmart website to do a 'future home budget' Picture yourself in the home you want and create a budget based on that including all the costs from rates and utilities to everyday spending at the supermarket and public transport Once you've created your future home budget you'll be able to see what money is leftover each fortnight That gives you a good idea for how much you can afford for mortgage repayments

If you're currently renting think about how much more you could afford to spend on rent each week That will give you a good indication of what you could afford in mortgage repayments too And keep in mind that your mortgage repayments could go up if interest rates rise You need to factor that in because you don't want to find yourself unable to make your repayments So there it is

When it comes to working out how much you can afford there's really no substitute for doing a budget

Source: Youtube

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