Hi guys Avi from Red Tie Mortgages. As we've already brought you the videos on Credit Guide and Fact Find
So next video is our Preliminary Assessment. What is Preliminary Assessment?
Preliminary assessment is done to find your borrowing capacity. It's not a final borrowing capacity is just
an idea of how much you can borrow
What I'm gonna do today is I'm just gonna take an
example of an average household
alright average household in Australia earns
around
$155,000 a year, so I will say there're two applicants
One earns $90,000 another earns
$65,000 ,two dependants
$5,000 credit card and a
car loan
So average household has minimum of these. Thanks
All right, a car loan repayment is approximately $500 a month
so when we do the calculation
so when we put it into the system, we will receive borrowing capacities for how much you can borrow from
approximately 40 or 45 lenders
So every lenders lending criteria is different
It depends on like how much assessment rates they have how much living expenses do they take in account and all that
But on average with
these figures
You you're going to get approximately $790,000 as a borrower. All right
Now the interesting part
let's say
We are going to move that credit card to ten thousand.
So everything else is the same. You've got two dependants, $90,000, $65,000 and $500
a month
Your car. Alright only thing we have changed here is
your credit card, so now credit card is 10 grand or $10,000
now your Borrowing capacity comes out to
$770,000 that's
$20,000 less
So for every $1,000 of your credit card you losing
$4,000 of your borrowing.
Now, let's make it more interesting.
Everything else is the same. again credit card is back to 5,000.
And we're going to make one dependent instead of two. You have one dependent.
Everything is the same
$90,000 salary $65,000 salary
$500 per month car payment and
your credit cards again $5000
Are you ready?
That's $870,000
So if you have one dependent that doesn't mean that you don't have to need to have kids. All right, it's just that
Like that's how it's calculated
This is how the banks are looking at it
so with one kid
everything else is saying
You're receiving approximately $80,000 thousand dollars extra
So this is a borrowing capacity basically in very simple terms, that's how your borrowing capacity is calculated
So this is just a basic video or a simple video on how your borrowing capacity is calculated
There are so many other things that come into account and that might push your
borrowing capacity up or it might bring your borrowing capacity down. All I want to convey in this video is
whenever, you're going to take the financial assistance of financial advice
It is very important for the Broker to tell you of this and it's very important for you
Tell the Broker everything so that we can I find out the exact borrowing capacity
The borrowing capacity might change if you want to buy an investment property, but always remember always remember
If you have owner occupied house different story
But if you're already renting and then you are trying to buy an investment property your rent is an expense
So it will again change the borrowing capacity it might bring it up it might bring it down it depends so
When you're renting if you're sitting with your Broker, and he is doing your borrowing capacity keep an eye out that he puts the rent in
Alright so those are the things, I will explain this all in the video 'Borrowing capacity'
This is just a prelim video. So I hope you understand what I'm trying to say
If you have credit cards, try to get rid of them or minimise them.
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till then 'be happy and financially fit'. Thank you
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