Searching for a new home is exciting, but it can be tough to narrow down a budget and price range without knowing your borrowing capacity.

To find out the answer to ‘how much can I borrow?’, your best bet would be to talk to a mortgage adviser but you can start with online loan calculators to give you an idea.

Typing in relevant specifics can give you an estimate of what you can borrow, and later you can get a specific evaluation from your adviser.

Information such as credit history, income, family size and so forth all have an impact on your buying power so it is best to gather this information ahead of time so you are well prepared.

Your mortgage adviser should be well versed in the borrowing criteria that banks and lenders ask of their clients, so he or she can help guide you on the proof you will need to be eligible for various lenders and products.

Tips from the professionals
To maximise your borrowing capacity, it is best to have fewer credit accounts open and low to non-existent balances.

You may wish to consolidate accounts to help you keep track of your finances and reduce your monthly payments.

Open department store cards and credit cards with zero balance still count against you, so you may wish to close unnecessary accounts.

Home loan pre-approval
Once you know what your buying power is, you can really get serious about property ownership. One way to do this is to get home loan pre-approval.

However, while this can help you to determine your borrowing capacity – things may change between the time you get it and the time you decide on a house, so it is important to maintain an ongoing relationship with your mortgage adviser to stay on top of any changes.

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DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.