Are U Finance Ready To Buy Your New Home? Bryce Deledio, a finance expert from UFinancial, recently explained that being finance-ready is not just about obtaining a loan, but whether one's financial affairs are in order and if they have the capacity to repay the debt, given that it is a big financial commitment that lasts for several years.
There are five key principles and two steps required to assess your borrowing capacity.
- The first influential factor is your credit history, and the role it plays, which is often misunderstood. The higher the credit score, the better you are perceived as a potential borrower by the lenders.
- The second, the importance of genuine savings, which involves putting together a deposit that the bank requires to obtain finance.
- The third factor is your income, which varies according to the industry you work in, and can impact your maximum borrowing capacity.
- The fourth influential factor is your living expenses that is categorised into fixed expenses and discretionary spending. The lenders take into account these expenses when assessing the borrower's capacity to repay the loan.
- Finally the fifth, pre-existing liabilities, such as credit cards, car loans, or personal loans.
Your capacity to borrow money is dependent on a combination of those factors. We urged you to be realistic about their financial situation and advise you to prepare in advance by assessing your borrowing capacity and understanding the factors that impact it. We advise you to get expert assistance to make informed decisions about your finances.
In conclusion, owning a home is a significant life decision that requires proper planning, especially when it comes to financing. Experts advise potential homeowners to be finance-ready by understanding the five key factors that impact their borrowing capacity, and seeking assistance to make informed financial decisions.
Always get independent financial and legal advice before making any financial decisions.
