It seems that ‘housing affordability’ is the term you see or hear in the media everywhere you turn at the moment. After the recent property boom and interest rate rises, people are wondering whether they can afford home loans or their rent payments.
Read on to find out everything you need to know about housing affordability in Australia, including answers to FAQs.
What is housing affordability?
‘Housing affordability’ is a blanket term to describe the ability of people to buy or rent a home. If you’re buying, it’s related to the percentage of your income that’s taken up by your home loan repayments. If you’re renting, it’s the percentage of your income that’s taken up by your rent payments.
Can I afford to buy a home?
You can use our borrowing power and home loan repayment calculators to work out the price of the home you can afford. You should aim to ensure that your repayments are no more than 30% of your pre-tax household income.
Ways to make your home more affordable include:
- finding a home loan with a lower interest rate.
- extending your loan term (for example, taking a loan out over 30 years rather than 25 years).
- borrowing less. You can do this by coming up with a higher deposit or buying a cheaper home (for example, a home in a regional location rather than a capital city).
Can I afford to keep my home?
If you already have your own home but you’re struggling with your repayments after the recent interest rate rises, then you may be in mortgage stress. If you’re in mortgage stress, an alternative option to selling your home is to consider refinancing. You may be able to refinance to a cheaper interest rate. You could also increase your loan term to make your repayments more affordable.
Your other option to reduce your repayments is to sell your home and buy a cheaper property. If you have a property in an expensive place like Sydney, then you may be able to move to a cheaper home in a regional location (if it’s practical for you to do so with your work commitments). More and more Australians are choosing to move to regional locations like Newcastle, Lake Macquarie and Maitland to take advantage of cheaper homes and a more relaxed lifestyle.
How we can help
If you are thinking about taking out a home or investment property loan and you need finance (or you want to refinance), then talk to our licensed and experienced brokers at Wisebuy Investment Group. We service clients in the Newcastle, Lake Macquarie and Maitland areas.
We work with more than 60 lenders in the Australian market and we can even help you with your home loan application. Importantly, we work for property buyers, not lenders.
Contact us today for an obligation-free chat to find out more. We’d be happy to answer any questions you have and to explore your refinance options with you.