Your Budget & Savings
– Know Your Power, Build Your Plan
Your Budget & Savings
– Know Your Power, Build Your Plan
Before you start house hunting, you need to understand two key things: how much cash you need upfront and how much you may be able to borrow.
Your savings, income, debts, living expenses and deposit all affect your buying position. A mortgage broker can help you work out your borrowing capacity, estimate your upfront costs, check whether you may qualify for grants or schemes, and guide you through the pre-approval process.
The clearer your numbers are before you start looking at properties, the easier it is to set a realistic budget and avoid surprises later.
Know Your
Borrowing Capacity
Your borrowing capacity is an estimate of how much a lender may be willing to lend you based on your financial position.
A mortgage broker can assess things such as:
• your income
• living expenses
• existing debts
• credit card limits
• savings
• financial commitments
• potential eligibility for government schemes
They can then help you understand what kind of property budget may be realistic for you.
This is important because the amount you can technically borrow is not always the same as the amount you should comfortably spend.
Work Out How Much Cash You Need Upfront
Your deposit is only one part of the money you may need when buying a home.
You may also need to budget for:
• your property deposit
• conveyancing or legal fees
• stamp duty, where applicable
• Lenders Mortgage Insurance, or LMI, where applicable
• other buying costs
A deposit may commonly range from around 5% to 20% of the property price, depending on your financial position, lender requirements and whether you qualify for any government support.
Your deposit may also come from different sources, such as genuine savings, bonuses, commissions or gifts. Different lenders may treat these sources differently, which is why it helps to get advice before assuming what will or will not be accepted.
Understand LMI and LVR
Two terms you may come across are LMI and LVR.
LMI, or Lenders Mortgage Insurance, may apply when you are borrowing a high percentage of the property value.
LVR, or Loan-to-Value Ratio, compares the size of your loan with the value of the property.
In some situations, LMI can be added to the loan, but this may increase the overall LVR. Your mortgage broker can help you understand whether this affects your deposit requirements or lending options.
Before you start house hunting, you need to understand two key things: how much cash you need upfront and how much you may be able to borrow.
Your savings, income, debts, living expenses and deposit all affect your buying position. A mortgage broker can help you work out your borrowing capacity, estimate your upfront costs, check whether you may qualify for grants or schemes, and guide you through the pre-approval process.
The clearer your numbers are before you start looking at properties, the easier it is to set a realistic budget and avoid surprises later.
Know Your
Borrowing Capacity
Your borrowing capacity is an estimate of how much a lender may be willing to lend you based on your financial position.
A mortgage broker can assess things such as:
• your income
• living expenses
• existing debts
• credit card limits
• savings
• financial commitments
• potential eligibility for government schemes
They can then help you understand what kind of property budget may be realistic for you.
This is important because the amount you can technically borrow is not always the same as the amount you should comfortably spend.
Work Out How Much Cash You Need Upfront
Your deposit is only one part of the money you may need when buying a home.
You may also need to budget for:
• your property deposit
• conveyancing or legal fees
• stamp duty, where applicable
• Lenders Mortgage Insurance, or LMI, where applicable
• other buying costs
A deposit may commonly range from around 5% to 20% of the property price, depending on your financial position, lender requirements and whether you qualify for any government support.
Your deposit may also come from different sources, such as genuine savings, bonuses, commissions or gifts. Different lenders may treat these sources differently, which is why it helps to get advice before assuming what will or will not be accepted.
Understand LMI and LVR
Two terms you may come across are LMI and LVR.
LMI, or Lenders Mortgage Insurance, may apply when you are borrowing a high percentage of the property value.
LVR, or Loan-to-Value Ratio, compares the size of your loan with the value of the property.
In some situations, LMI can be added to the loan, but this may increase the overall LVR. Your mortgage broker can help you understand whether this affects your deposit requirements or lending options.
Get Pre-Approval
Before You Start
Making Offers
A home loan pre-approval, sometimes called conditional approval, gives you an initial indication of how much you may be able to borrow.
This can help you:
• set a realistic property budget
• narrow your search
• understand your financial position
• make offers with more confidence
However, pre-approval is not a guarantee of final approval.
Final approval may still depend on the property valuation, your financial circumstances at the time of purchase and the lender’s requirements.
That is why a strong pre-approval should be based on verified income and financial documents, rather than just a quick estimate.
Get Pre-Approval
Before You Start Making Offers
A home loan pre-approval, sometimes called conditional approval, gives you an initial indication of how much you may be able to borrow.
This can help you:
• set a realistic property budget
• narrow your search
• understand your financial position
• make offers with more confidence
However, pre-approval is not a guarantee of final approval.
Final approval may still depend on the property valuation, your financial circumstances at the time of purchase and the lender’s requirements.
That is why a strong pre-approval should be based on verified income and financial documents, rather than just a quick estimate.
Strengthen Your
Financial Position
If you are preparing to buy your first home, there are a few practical things you can do to improve your financial position.
Reduce Existing Debt
Existing debts can reduce your borrowing capacity.
Paying down high-interest debts such as credit cards or personal loans may help improve your position.
It can also be worth reviewing unused credit cards, because lenders may consider the full credit limit, not just the balance you currently owe.
Avoid Taking on New Debt
New loans or financial commitments can affect your borrowing power.
If possible, avoid taking on large new debts such as:
• car finance
• personal loans
• financed furniture
• Buy Now Pay Later commitments
This is especially important after receiving pre-approval, because changes to your financial position may affect the final loan assessment.
Reduce Unnecessary Expenses
Your living expenses are also considered when lenders assess your application.
You may be able to strengthen your position by reviewing things like:
• dining out
• subscriptions
• discretionary shopping
• phone plans
• insurance
• utilities
The goal is not to stop enjoying life. It is simply to understand where your money is going and identify areas where you can save more consistently.
Build Your Savings Habit
Simple habits can make a big difference over time.
You could:
• set up automatic transfers into a savings account
• track your spending
• set a clear deposit goal
• review your budget regularly
• look for cheaper alternatives for everyday expenses
The more organised your finances are, the easier it becomes to prepare for your home purchase.
Strengthen Your
Financial Position
If you are preparing to buy your first home, there are a few practical things you can do to improve your financial position.
Reduce Existing Debt
Existing debts can reduce your borrowing capacity.
Paying down high-interest debts such as credit cards or personal loans may help improve your position.
It can also be worth reviewing unused credit cards, because lenders may consider the full credit limit, not just the balance you currently owe.
Avoid Taking on New Debt
New loans or financial commitments can affect your borrowing power.
If possible, avoid taking on large new debts such as:
• car finance
• personal loans
• financed furniture
• Buy Now Pay Later commitments
This is especially important after receiving pre-approval, because changes to your financial position may affect the final loan assessment.
Reduce Unnecessary Expenses
Your living expenses are also considered when lenders assess your application.
You may be able to strengthen your position by reviewing things like:
• dining out
• subscriptions
• discretionary shopping
• phone plans
• insurance
• utilities
The goal is not to stop enjoying life. It is simply to understand where your money is going and identify areas where you can save more consistently.
Build Your Savings Habit
Simple habits can make a big difference over time.
You could:
• set up automatic transfers into a savings account
• track your spending
• set a clear deposit goal
• review your budget regularly
• look for cheaper alternatives for everyday expenses
The more organised your finances are, the easier it becomes to prepare for your home purchase.
‣ The Key Takeaway
Before you start looking for your first home, get clear on your numbers.
Understand:
how much you can borrow, how much cash you need upfront, what costs you need to prepare for and what steps may improve your financial position.
Working with a mortgage broker can help you build a clearer financial plan, understand your options and move into the property search with greater confidence.
Next Step
Once your budget and savings plan are in place, the next stage is learning how to search the market, compare properties and make informed decisions.
Other Resources
Other Resources
NEED HELP WITH YOUR MORTGAGE?
Make Your Next Move
With Confidence
Get expert guidance from WinSquare Finance on your mortgage options, borrowing
power, deposits, pre-approvals, and more. Understand your choices and make a
decision that works for you.
NEED HELP WITH YOUR MORTGAGE?
Make Your Next Move
With Confidence
Get expert guidance from WinSquare Finance on your mortgage options, borrowing power, deposits, pre-approvals, and more. Understand your choices and make a decision that works for you.
