Here’s how you determine how much borrowing power you have
By: Hitesh Khan/
Your borrowing power, which is, the amount you can afford to borrow is referred to as your ‘borrowing capacity’. Your borrowing power is based on factors including:
- Your income – This is a key factor determining the amount you can afford to borrow. Your income needs to comfortably cover the likely repayments on your loan as well as the other costs associated with home ownership like repairs, insurance, council rates, and strata fees, while still leaving you money to live on
- Your other financial commitments – Lenders will also look at your current financial commitments to calculate what you can afford to pay. They will take into account things like credit card, personal loan or car loan repayments plus other debt where applicable
How can a mortgage broker help up your borrowing power?
A mortgage broker is able to give you a clear picture of your borrowing capacity before you start house hunting. And importantly, help to ensure your finance is sorted when you find your dream home. The earlier you meet with a broker, the more informed you’ll be at an early stage of the moving process.
Independent mortgage brokers are beginning to make a significant positive impact on the lending industry. Although in the initial years, it was the well-informed and the well-heeled were the ones who used mortgage brokers, more and more new real estate loans are being originated by brokers today.
Today, the use of a professional mortgage broker is one of the key strategies used by sophisticated borrowers.
Myth = It costs more to get a mortgage through a Professional Mortgage Broker. It does not cost more to get a mortgage through a broker than it does a banker. It can actually cost less. Brokers originate loans at wholesale rates and are paid by the lender while providing the borrower the same competitive rates and fees as a bank.
A mortgage broker is an independent real-estate financing professional who specialises in the origination of residential mortgage loans. Mortgage brokers normally pass the actual funding and servicing of loans on to wholesale lending sources. A mortgage broker is also an independent contractor working with as many as 20 lenders at any one time. By combining professional expertise with direct access to hundreds of loan products, your broker provides the most efficient way to obtain financing tailored to your specific financial goals.
In the volatile home-lending market, mortgage brokers can serve as safeguards, offering their clients security, safety, and peace of mind. One of the broker’s most important functions is escorting your loan application through the entire process, constantly patrolling the transaction components for possible breakdowns. A professional mortgage broker can wade through the mountains of rate data and program options, researching current market conditions to find the most accurate and up-to-date information about cost-effective loan options.
Engaging a mortgage broker can help you save time and money and ease the process of shopping for a home loan. A good mortgage broker would be able to analyse your unique situation and recommend which home loan features are best for you. It actually makes good sense for someone who is looking to invest or someone with complex needs and goals, to use the services of a mortgage broker. It is especially an excellent option if you don’t know much about the best home loans or the home buying process.
Develop your ‘next home’ budget
Don’t base the budget for your next home only on the expected selling price of your current one – you might not get the price you want. Your upgrading budget should also take into account the costs of selling your current home. This will shape the profit made on the sale, and therefore how much cash you can contribute to the overall purchase compared to how much you’ll need to borrow.
Secure loan pre-approval
It can be heartbreaking to find the perfect place only to learn that you can’t afford it. Even worse is losing your deposit because you won at an auction but couldn’t secure finance for the balance of the purchase price. Don’t risk it.
With pre-approval you’ll know how much you can borrow and how much you can spend and you won’t waste time looking at places out of your price range. Your mortgage broker can help you with a home loan pre-approval before you start the hunt.
How to Secure a Home Loan Quickly
When using mortgage broker services, know that they can up up your borrowing power and set you up on a path that can get you the best home loan meant only for you, in a quick and seamless manner.
Our consultants at iCompareLoan have close links with the best lenders in town and can help you compare Singapore home loans and settle for a package that best suits your home or commercial purchase needs. Find out money saving tips here.
Whether you are looking for a new home loan or to refinance your existing one, the Mortgage broker can help you get everything right from calculating mortgage repayment, comparing interest rates all through to securing the best home loans in Singapore. And the good thing is that all our services are free of charge. So it’s all worth it to secure a loan through us.
For advice on a new home loan.
For refinancing advice.