Passionate, energetic and extremely focused, Amber Werchon is one of Australia’s highest sales achievers. She has sold over $54 million dollars worth of property, was the youngest person to ever receive the REIQ Salesperson of the Year from 2005 to 2007, and has recently established her own agency, Amber Werchon Property.

Borrowing to suit your circumstances

December 10 | Amber Werchon

We find that most people we work with set themselves a strict budget before going out and viewing homes in the market place.

While the budget is set on what they "feel" they can borrow, there is often a large difference in what they think they can borrow compared with what their actual capacity to borrow is.

The capacity to borrow money is based on the amount of income that the individual generates, whether it is by personal income or income realised from a rental property or a share portfolio.

Capacity is based on the notion of the average income and the percentage of that income that can be comfortably set aside for the repayment of any mortgage.

The secret here is to recognize that everyone goes through different stages in their life - single with no commitments, married with children, retired and ready to travel.

These changes can affect your repayment capacity so it pays to be aware of this before committing to a certain repayment level. Also keep in mind that when your personal commitments are low, it’s a great time to invest in property as it’s one of the best methods of enforced saving.

To delve into property is always a big step; particularly when there’s plenty of talk about increasing interest rates, but at the end of the day the talk that occurs in the community in relation to interest rates is often just that - talk.

Remember that you do have a choice whether you select a variable rate or a fixed rate home loan. A fixed rate provides you certainty for a period of say up to five years, while a variable rate changes with the market place.

Decide what’s best for your current circumstances and work within that parameter.

So when looking for that next home, whether it be an investment property or your first home, take the time to review your borrowing capacity before you lock down on a budget.

Review your finances and make sure you are comfortable with your decision.

Remember the day you buy is in effect the day you sell, as it has a significant bearing on the amount of profit you will generate from your involvement with that property.