So you know you want to investing in property but you’re not really sure what you can afford to buy or want to spend?  There are a few considerations when it comes to working out what you spend and in this article, we’ll be talking through these considerations to make sure you’re making the most of your investment opportunities, without over-stretching yourself in the process.

When it comes to understanding your purchase capacity and appetite there are three main parts to this conversation: 

  • What the bank is willing to lend you 
  • What is costs to actually buy a house and so what you’ll need upfront
  • What you want and are comfortable to borrow!

What will the bank lend you?

There are two main factors here:

  • Equity/Deposit – this is the money that you will be putting into the purchase.  This 
  • Serviceability – your income, financial responsibilities and your ability, therefore, to repay the loan as assessed by the bank.

You should discuss these things with a good mortgage broker who will be able to help you work out what is possible.  

Upfront costs

You’ll need a deposit (cash or equity), but you’ll also need access to funds up front for other purchase costs – some of which you won’t be able to borrow money for.

      • Stamp duty/transfer duty
      • Mortgage/Finance – broker, application fees, valuation fees
      • Lenders mortgage insurance (this one can be included in your loan)
      • Conveyancer/Solicitor
      • Pre-purchase inspections – building and pest, electrical etc.
      • Buyers Agent
      • Buffer


Amount of money and or cashflow levels you are comfortable with

You’ll need to understand what you can afford to/are comfortable with paying out of your pocket each month to cover the expenses of the property.  For some people this is a major factor in deciding to purchase and I would strongly recommend spending a little bit of time to ensure you understand this.  

You’ll need to have an understanding of your own income and expenses to work out what level of available cashflow you have to put toward the property on an ongoing basis and you’ll need to have an understanding of the income and expenses of owning a property, some of these include:


  • Rent


  • Loan interest
  • Council rates
  • Water rates
  • Body Corporate fees and administration
  • Insurance
  • Repairs and maintenance
  • Vacancy rates to expect and factor in
  • Management fees


  • Note, this is not income, it’s a tax saving.

 Stress Testing

As much as you can estimate costs and cashflow and plan for the future.  Things don’t always stay the same, in fact, they can almost be guaranteed to change.  During the lifetime of a loan things interest rates will likely change, rents will change, your income may change, your lifestyle and needs may change.  For these reasons you need to stress test your cost estimates: 

    • Rents/Yields change – test your cashflow estimates with your worst case scenario rent as well as your best case.  Rents change over the lifetime of an investment and sometimes it’s not always an increase!
    • Interest rates change – test your cashflow estimates with higher interests rates to make sure you can weather some interest rate rises comfortably.
    • Lifestyles changes – are you planning any big changes, such as travel or having children?  You may need to factor in these income changes.

Buying property is a great step for wealth creation but it’s important you have a good understanding of the numbers before jumping in. 

Don’t hesitate to contact us if you wish to discuss your property investing plans.