Can I Buy Home?
Buying your first home starts with understanding what you can comfortably afford. Before you begin searching for properties, it's important to know your borrowing capacity, how much deposit you'll need, what lenders look for and whether you qualify for any government assistance.
Borrowing Capacity
One of the first questions almost everyone looking to purchase property asks is, "How much can I borrow?" While it's an important question, it's not always the best place to start. A more useful question is, "How much can I comfortably afford?"
Borrowing capacity is the amount a lender may be prepared to lend based on your financial circumstances. However, it's important to understand that this figure is not the same as your ideal purchase budget. Just because a lender is willing to approve a certain amount doesn't necessarily mean it is the right amount for you.
Lenders assess far more than just your income. They will consider your existing debts, living expenses, employment history, credit commitments, household size, dependants, savings, and the type of property you intend to purchase. They also apply their own lending policies and assessment methods, which means two lenders can often produce very different borrowing capacities for exactly the same applicant.
Many people use online borrowing calculators as a starting point, and while these can provide a general guide, they rarely take into account the full picture. They don't consider lender policy differences, your future plans, or the way your finances are structured. As a result, they can sometimes provide a misleading impression of what may actually be possible.
At Square Peg Mortgage Management, we take the time to understand your complete financial situation before recommending a borrowing range. More importantly, we help you determine what you can comfortably afford, taking into account not only today's repayments but also your lifestyle, future goals and the unexpected expenses that can arise throughout home ownership.
Our objective isn't simply to maximise your borrowing capacity. It's to help you purchase a home with confidence, knowing your mortgage remains manageable both now and into the future.
Deposit Requirements
One of the biggest misconceptions among home buyers is that you must have a 20% deposit before you can purchase a property. While having a larger deposit can certainly provide more options and may reduce your borrowing costs, it is not always a requirement.
The amount of deposit you'll need depends on a range of factors, including the type of property you're buying, the lender you choose, whether you're eligible for any government assistance, and your overall financial position. In many cases, it may be possible to purchase a home with a smaller deposit, although additional costs such as Lenders Mortgage Insurance (LMI) may apply.
It's also important to remember that your savings are only one part of the equation. Purchasing a property involves a number of upfront costs that should be considered when planning your budget. Depending on your circumstances, these may include stamp duty, legal and conveyancing fees, building and pest inspections, loan establishment costs and moving expenses. Understanding these costs early can help avoid unexpected financial pressure later in the process.
At Square Peg Mortgage Management, we'll help you understand not only the minimum deposit you may need, but also what deposit level is likely to place you in the strongest financial position. We'll explain the advantages and disadvantages of different deposit amounts, any government assistance that may be available, and help you develop a strategy that suits your circumstances.
Our objective is to help you enter the property market with confidence, knowing you've planned not only for the purchase itself but also for the costs that come with owning your new home.
Whether you're just starting your property journey or you're ready to take the next step, we're here to answer your questions, explain your options and help you make informed decisions.
Genuine Savings
Some lenders require borrowers to demonstrate what is known as genuine savings before approving a home loan. Genuine savings simply refers to money that you have accumulated yourself over time through regular saving, rather than funds received as a gift or borrowed from another source.
The purpose of genuine savings is to demonstrate that you can consistently manage your finances and have the discipline to save towards your home purchase. While not every lender has the same requirements, many will look favourably on applicants who can show a history of building their savings over several months.
It's important to understand that genuine savings doesn't always have to come from a traditional savings account. Depending on the lender, evidence may include regular contributions to a savings account, term deposits, shares, managed funds or equity built up in another property. Some lenders will also accept rental payment history as evidence that you can comfortably meet ongoing housing costs.
If part or all of your deposit has been gifted by a family member, this doesn't necessarily prevent you from obtaining a home loan. Many lenders accept gifted funds, although some may still require you to demonstrate a level of genuine savings or meet other lending criteria.
At Square Peg Mortgage Management, we'll explain each lender's requirements and help identify the most appropriate options based on your individual circumstances.
By understanding your financial position from the outset, we can often recommend lenders whose policies best align with your situation, helping to make the application process smoother and reducing the likelihood of unnecessary delays.
Our role is to ensure you understand what evidence may be required before you apply, allowing you to approach the process with confidence and realistic expectations.
Government Assistance
Purchasing your first home may be more achievable than you think, thanks to a range of government initiatives designed to help eligible buyers enter the property market. Depending on your circumstances, assistance may be available in the form of grants, stamp duty concessions or schemes that allow you to purchase with a smaller deposit.
Eligibility for these programs can vary depending on factors such as where you're purchasing, the value of the property, whether it's a new or established home and your personal circumstances. As government policies and eligibility criteria change from time to time, it's important to ensure you're relying on current information when planning your purchase.
Understanding which assistance programs you may qualify for can have a significant impact on your overall buying costs and the amount of savings you'll need before purchasing a property. However, many buyers are unaware of the assistance available or assume they don't qualify without checking.
At Square Peg Mortgage Management, we stay up to date with the assistance programs available to eligible home buyers and can explain which schemes may be relevant to your circumstances. We'll help you understand how these initiatives work alongside your home loan options so you can make informed decisions from the outset.
Our goal is to ensure you take advantage of every opportunity available to you, making your path into home ownership as straightforward and affordable as possible.
Have Questions?
Whether you're buying your first home or simply exploring your options, every situation is different. If you'd like personalised guidance, we're here to help.