The ultimate question is, how much should I borrow?

And the ultimate answer is… it’s up to you. You have to decide what is right for your situation. You understand your situation the best, and therefore no-one else can make that decision for you.

For example, maybe you are looking for your first property, or maybe you are just looking for something to buy so that you no longer need to rent (and buying at the time is cheaper than renting). Everyone’s situation is different.

In this book you have already worked out some of your aims regarding:

1. why – why you want to buy;
2. timeline – how long you would like to take your home loan out for;
3. repayments – how much you can repay per week, fortnight or month;
4. maximum interest – how much you are willing to pay in interest;
5. other aims = anything else you may need to consider when buying;

And together this has helped you to work out your

1. maximum home loan = the maximum loan amount you can borrow in order to pay your loan off in the time you want to pay it off in.

For example, our aims were:

• why = to buy our first home (easy to maintain, outside our ideal area, small buying budget);
• timeline = to pay it off in five years;
• repayment amount = $1,200 per week;
• interest = pay less than $50,000 during those five years;
• other = avoid stamp duty (property <$500,000);
• maximum loan = ~$250,000.

Together with some tips for borrowing, you are now well and truly on your way to buying.

Take a moment to write down your aims. Add your answers to the previous questions here:

• why = ___________________________________;
• timeline = ________________________________;
• repayments =  ____________  per ____________;
• maximum interest = _______________________;
• other = __________________________________ ________________________________________;
• maximum loan =

These goals helped us to determine for ourselves the maximum we wanted to borrow (even if the banks wanted to give us more).

Our ideal home loan at the time was approximately $250,000.

We stuck to this amount when buying.

If you already have a loan, start to take control of it by determining how long you want to continue with your home loan for and how much interest you are willing to pay during the rest of the life of your loan. Use our ‘How long’ calculator, free right here on payitinfive.com to work this out. Work out home much you would need to repay regularly (per week, fortnight or month) and take action to start meeting those repayments.

Continuously.

And up next, we take a trip back to your why.