Home loans borrowing calculator

Top tips for home loan borrowing

1. Keep an eye on your LVR
LVR stands for loan to value ratio, which is all about how much you’ve saved up for your home loan deposit. Generally, the lower your LVR, the better you’re borrowing power will be. In Australia, the preferred LVR is anything less than 80% - which means you should be aiming for a deposit of 20% or more of the value of your dream home. If that seems like too much of a hurdle, there are lenders who offer low deposit home loans, for LVRs up to 95%. But keep in mind that if you opt for one of these offers, you’ll have to take into account the cost of lenders mortgage insurance.

2. Factor repayments into your plans
The more you borrow, the bigger your repayments will be! So even if you qualify for a whopping home loan, ask yourself if you really need it and if the repayments are in line with your monthly budget and lifestyle. A good rule of thumb is to compare the repayment amount with your current rent. If they’re similar figures, you should be able to handle the repayments pretty easily. But remember to plan for the possibility of a rate rise, as shown on the calculator - it’s best to have a financial buffer, just in case.

3. Plan for stamp duty
Another big cost to consider when looking for a home loan is stamp duty. This government charge can sometimes range into the tens of thousands of dollars, which might just about break your budget. If you - or your wallet - don’t like the idea of paying it as a lump sum, you can also opt to add it to the price of your monthly repayments. Find out how much you might be up for in stamp duty with our handy calculator.

4. Review your credit report
To boost your borrowing power before you apply for a home loan, get a copy of your credit report and go over it with a fine tooth comb. Any mistakes or incorrect details could be stopping you from being approved for a loan. Read up on credit history and ratings here.

5. Pay off debts
Got a credit card debt hanging over you? It could be damaging your chances of getting a home loan. Check out a balance transfer deal and blast credit card debt to get back on track toward a home loan.

6. Start saving!
Having a regular savings plan will make you look reliable and money savvy. Plus, setting up good savings habits will help you build up a home loan deposit and lower your LVR for a better deal on your home loan.