When assessing your loan application lenders need to decide how much money they can lend you. They have a number of legal obligations they need to satisfy when they do this. These legal obligations are generally referred to as Responsible Lending obligations.
When evaluating your Borrowing capacity lenders will assess your income, your expenses and your commitments. It is important that you think throughly how your income and expenses will change after you purchase your property and you adjust them accordingly.
Below you will find the categories that are most likely to change.
If you are using all or part of your savings to purchase your new property you most probably will stop receiving or receive reduced interest from your savings.
If you are using all or part of your investment savings to purchase your new property you most probably will stop receiving or receive reduced investment income.
If you purchase an investment property you need to think what the expected rental income will be. To help you determine this amount we will tell you the current average rent for the property type and location you have selected.
Financial & Insurance
After you buy a property you will need to insure it and you might be liable to pay taxes, here are some average expenses to help you work out your post purchase changes.
|State||Land tax payable (on $1,000,000 value)||Website|
|NT||No land tax in NT|
You need to consider things like maintenance and home upkeep. One rule of thumb for calculating maintenance costs is an average of 1 per cent of the value of the property per year, for example for a $1,000,000 property you’re looking at setting aside around $10,000 per year in order to keep the house in good repair.
If you are buying a home to live in you will probably stop paying rent so remember to deduct it from your expenses.
Services & Utilities
With a new home comes new bills. If you buy property to live in you will have the known bills including Gas, Electricity, Phone and Internet. There will be also be new bills that you only pay as an owner: water rates, council rates and strata fees. Properties for Investment also pay water rates, council rates and strata fees; these can make a big dent to the money you will have available to pay off your home loan. Here are some averages to help you calculate your post purchase changes
There are no official stats for Gas average bills, some information can be found on bill comparison websites. In general Gas bills tend to be slightly cheaper than energy bills. According to Canstar.com.au in NSW for a daily consumption of 50.8Mj you can expect an annual bill between $713 to $796, that is between $60-66 per month. In Melbourne a daily consumption of 81.5Mj will attract annual fees of $805 to $1,016 that is between $67-$85 per month (source:canstar.com.au).
For the purpose of the calculation we encourage you to be as realistic as possible. If your expenses are too low lenders might use their own calculation of minimum expenses based on a family of your size. In addition, lenders will review your transaction and credit card statements to confirm the figures you put in.
This page was last updated on 24 February 2020