“What size mortgage can I get?” These 4 questions reveal how much you can borrow

About to take the plunge on a home loan? This handy guide helps you prepare an application without destroying your credit score

About to take the plunge on a home loan? This handy guide helps you prepare an application without destroying your credit score

You’re ready to buy your first home or investment property. You’ve worked hard and you’ve saved. But, to turn that dream into reality, you need a loan… and you’re wondering how much you can borrow. You also hear about the General Manager of APRA, Heidi Richards’ statement in 2016: “Mortgage lending at four times gross income is relatively common, at one-third of all new housing loans. Lending at six times or more of gross income is much smaller but still material – nearly 10 per cent.” So, given her statement, you’d expect to borrow around five times your gross income. Unfortunately, it’s not that simple. The nature and type of your income is important, too. As does your credit score and expenses. Fortunately, there are a few little known tips you can use to tilt the odds in your favour.

1. How much is your deposit?

Generally speaking, the bigger the deposit you can put down, the better – especially if the deposit is over 20% of the property’s value. Here’s what you might pay each month on a $500,000 property based on different deposit amounts. The larger your deposit, the lower your repayments for a certain loan size will be. This assumes a 30 year principal and interest loan, repaid monthly, at a 4% interest rate. It doesn’t automatically mean lenders offer you a larger loan. But what most people don’t know is it gives you more power to negotiate a better deal with lenders. It also lowers your the size of your loan and, therefore, reduces your repayment amounts so the loan is easier to pay off.

2. What is your income?

Expecting a raise soon? Many lenders accept a letter from your employer confirming a raise is on the cards. When you’re ready, see for yourself: Start using this incredibly accurate borrowing power calculator to discover how each of these factors can change how much lenders are likely to offer you. Be warned, though: Not all income is treated equally. If you are self-employed, some lenders will see you as higher risk. The same applies for casual or contract work. Bank hopping – bouncing from bank to bank until you’re approved – can hurt your credit history. So speak to a qualified expert who can shortlist lenders that are friendlier to your circumstances before applying. Two incomes are usually better than one. If your partner earns a similar income, it could double your borrowing capacity. But be sure to check your partner’s credit history first. Lenders may see you as a higher risk and reduce the loan amount they’re willing to lend if you or your partner have a poor history. (Bonus tip: Got a job offer from somewhere else? Some lenders accept a letter from your new employer, too).

3. What are your expenses?

It’s time to cut the fat! Yes, go ahead and eliminate expenses where you can because banks take a good, hard look at your credit cards, loans, school fees and other bills. They’ll use this information to assess how much to lend. So add up all your expenses. Good news: If you’re buying a home to live in, you can leave off your current rent as that payment will evaporate. Next, put your expenses, income and ideal purchase price into a mortgage calculator. This gives you a decent thumbnail of where you stand. After that, you can email us at customer.care@uno.com.au. How much can I borrow?Use UNO's calculator to estimate your borrowing capacity. Calculate Now

4. How often should I make home loan repayments?

Determine how much you can borrow before filling out loan applications. As you already know, too much bank-hopping can damage your credit rating and restrict your chances of getting any loan at all. So don’t make that mistake. You can email us at customer.care@uno.com.au. as soon you as can or use a mortgage calculator. As you may know, you can nominate a fixed repayment amount on a weekly, fortnightly or monthly basis. Just as long as it’s higher than the minimum contracted loan repayment, lenders can offer flexibility. Depending on your situation, we usually recommend our clients make more repayments in a year. That’s because it saves you money over the longer term and you pay off your loan sooner. Bonus tip: You should also consider a pre-approval for your loan before purchasing. Most people don’t know, but pre-approvals are fast, easy to get and give you comfort in knowing how much you can afford. Plus, you need a pre-approval loan to bid at auction. Many investors and homeowners make the mistake of doing the groundwork to locate their perfect property, only to miss out when they discover can’t bid on auction day because they didn’t properly organise their paperwork. Book in a quick call with our customer care team.Book a call in with UNO

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What our customers are saying

Marlon Baena
July 22, 2024
Karis dedication to assisting with our home loan, even while I was on holidays, truly exemplifies a commitment to excellent service. It's the small things that often make a big difference, and it seems Karis attention to detail and clear communication were key to our smooth home purchase. I highly recommend using UNO and Karis for your home loan needs.
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Olivia Gill
July 18, 2024
We recently used UNO Home Loans to assist us with securing our new mortgage in AU (had moved here from NZ). We had Michael Parsons as our mortgage broker and he was extremely responsive and helpful the whole way through the process. Was a great experience and definitely recommend :)
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Yash Karma
July 18, 2024
Andrew Wyers and team have been amazing. Andrew is very knowledgeable, offers practical advice and he has been pivotal in helping me secure a mortgage at a very competitive interest rate. He was highly responsive to my queries and,being a new immigrant to Perth, he was very patient with my many many questions. An added benefit for me was his knowledge of how superannuation here works. A hec of a great guy to work with, reliable and he goes above and beyond. I would recommend highly recommended him, especially for new immigrants. In fact, I will be using him again very soon!
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Rosie Deiath
July 2, 2024
Karis from UNO was so supportive throughout the entire process of buying our first home. She was contactable at any time, and answered all our silly questions for us. We couldn't recommend Karis and her team enough, as it always felt like she was in our corner with our best interests at heart.
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Jack Mikkelsen
July 2, 2024
We dealt with Karis Churchill as the mortgage broker for our first home. Karis was so supportive and knowledgeable through the whole process! A+ mortgage broker. Definitely utilise her expertise if you’re buying a house!
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Kapil Baldota
June 25, 2024
Eren Tan is absolutely one of the best mortgage brokers in Melbourne! Keeping us well informed throughout the process. Eren gave us a helpful hand in managing to get our loan over the line in a quick and efficient way which is what we wanted and he delivered on that. Thank you Eren Tan!
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June 21, 2024
I only have praise from my Uno experience! I was a broker sceptic, having done all of the hard work myself for my first two property purchases and sale. I'm now a proud broker advocate having used UNO (Karis Churchill) for two refinances and purchase. The value add Karis brought cannot be underrated! Not only has Karis got me the best rate, with a bonus cash back (nearly unheard of in this climate), she has done it with the least back-a-forth and with the least administrative burden on me (the thing that can deters people from refinancing to begin with). Karis is always on top of everything. Karis knows her stuff. She is the most responsive of any professional service provider I've ever used (my banker never text with an update at 7pm on a Sunday) without being overbearing. You know she's got your back and in my experience the value speaks for itself. Thank you to the whole UNO team, thank you especially to Karis.
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Leanda Cawdry
June 8, 2024
Very pleased with the outcome of this process, Michael Parsons and his team at UNO were helpful, communicative, and took all the stress out of the process of finding me a refinance deal that met my needs. Would definitely recommend Michael and UNO, and I already have!
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Glen Matthews
May 29, 2024
Regarding UNO Home Loan services. I had great experience with uno home loans, Michael parsons was my broker for UNO Home Loans we had excellent communication throughout the whole home loan application. If I had any questions on home loan application which were many were answered in great detail. He had the time to assist me in filling out endless application forms at anytime through the day or night which made the application process stress free. So I would strongly recommend Michael parsons from UNO Home Loans to try his services you will not be disappointed. Thanks to Michael parsons I have the lowest home loan interest rate I could ever hope for which I particularly ask for. It’s was a pleasure working with him. And will be using his services in the near future.
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Gillian Anderson
May 28, 2024
Thank you to Michael and UNO for their help in securing our home loan. I like the way they break everything down in simple terms to ensure that you can make the right decision. Michael was polite and very patient to help us get things across the line. We are now sitting in our first home away from rental circus. Can't recommend them enough. Thanks Michael and thanks UNO
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Andy Song
May 17, 2024
Amy has been absolutely wonderful as a broker. I would not hesitate one bit in recommending her services.
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Troy H
May 13, 2024
Scott Wilkinson did a great job as my broker. He was very patient and always happy to answer my numerous questions throughout the considerable period of time that it took to secure a suitable property. Would certainly recommend Scott and the team at UNO for anyone seeking a broker.
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