Before you can buy, you need to save a deposit and enough money to cover costs associated with purchasing a property such as legal fees, stamp duties, mortgage insurance and title searches.
Usually you need to save between 5-15% of the property's purchase price (or property and construction price when building) as your deposit. There are also legal costs such as state government stamp duties and usually application fees. You should also take into consideration Home Loan Protection insurance, and Home & Contents insurance once built.
So, just how much can you borrow?
As a rough guide your loan repayments should not exceed 30% of your before tax income (this can be a combined income if you're buying with someone else). It also depends on your current commitments and the value of the property you want to purchase. Use the calculator below as a guide to how much you can borrow.
Renovating your Home
Just as you need to work out how much you can afford when buying a property, you likewise need to do your sums when renovating. Whether you have already determined the cost of your renovation, or are looking into how much you can borrow, you should be aware of all the finance options available to you. This will affect how much you can borrow.
Building Your Home
Before building of your home commences, you will be required to pay a deposit to the builder. This deposit should be no more than 10% if the contract price is less than $20,000 and 3% if the contract price is $20,000 or more. Be wary if the builder is demanding a larger deposit than this.
As work progresses, you will be required to make progress payments. Most commonly there are five payments, one at the end of each of the five stages. As most Sates/Territories have their own legislation concerning progress payments, it's important to check your state's legislation before agreeing on a payment term with your builder.
Tip: Avoid making lump sum payments until the job is complete. If the work is shoddy, or hasn't been completed, you may have trouble getting your money back.