How Much Should I Borrow? – A Guide for Property Buyers
When purchasing a property, one of the biggest decisions you’ll face is determining how much to borrow. While some buyers aim to maximise their borrowing capacity, others might find themselves in a position where they don’t need to stretch their finances to the limit. At Blambles Finance Group, we often encounter clients who have the capacity to purchase with cash or without the need for debt, but still wonder whether taking out a mortgage is the right move.
Here’s a perspective to consider: Providing you are responsible with money, it could make sense to borrow as much as you can when you can, because when you truly need it, you may not be able to.
Let’s explore why this approach might work for you:
1. Preserving Liquidity and Financial Flexibility
By taking out a mortgage, you retain cash reserves, allowing you to maintain liquidity. This flexibility can be invaluable in emergencies or when unexpected opportunities arise. Whether it’s funding a new business venture, covering unforeseen expenses, or taking advantage of a high-return investment, having ready access to cash can make all the difference.
2. Leveraging Low Interest Rates
In a low-interest-rate environment, borrowing can be a cost-effective way to finance your property purchase while keeping your savings intact. Over time, the potential growth of well-invested savings could outpace the cost of your mortgage.
3. Tax and Investment Opportunities
If your property is an investment, the interest on your mortgage may be tax-deductible. Even if it’s your primary residence, keeping your capital invested elsewhere—such as in shares, managed funds, or other income-generating assets—could yield significant long-term benefits.
4. Accessing Credit When It’s Easier
Lending policies can change, and your personal circumstances can evolve. If you find yourself in a different financial position down the track, it might be more difficult to secure finance when you need it most. Borrowing now ensures you have access to funds while your financial profile is strong.
A Balanced Approach
For residential home loan borrowers, there are strict rules to adhere to, including compliance with the National Consumer Credit Protection (NCCP) Act and, as brokers, the Best Interests Duty (BID). These regulations are in place to ensure that any loan recommendation aligns with your financial goals and is in your best interest. Responsible borrowing is key, and taking on a mortgage you can’t afford or stretching your finances to uncomfortable limits is not supported.
At Blambles Finance Group, we recommend assessing your goals, current financial situation, and future plans to strike the right balance between leveraging debt and maintaining financial security.
If you’re unsure about how much to borrow or how a mortgage could fit into your broader financial strategy, we’re here to help. Our team specialises in crafting tailored solutions that align with your long-term objectives, helping you unlock wealth opportunities while safeguarding your financial wellbeing.
Ready to Make Your Move?
Contact Blambles Finance Group today to discuss your property purchase plans and borrowing strategy. Together, we’ll ensure you make informed decisions that set you up for sustainable growth and financial success.
