Consider your long-term needs and circumstances

Property ObserverDecember 7, 2020

Under the National Consumer Credit Protection Act, licensed mortgage brokers and lenders must make reasonable inquiries about your financial situation, requirements and objectives; take reasonable steps to verify your financial situation; and assess whether a credit contract is “not unsuitable” for you.

It is wise to make your own assessment before speaking to your lender or broker about your refinancing options.

Take time to consider what your plans and goals might be five and 10 years into the future.

For example, if you’re planning on starting a family perhaps one source of income will be diminished or will disappear for 12 months or more, so taking out a bigger mortgage may place greater strain on your finances.

You should also consider your employment prospects over the same period of time and future expenses (paying for your children’s education, overseas trips, new cars, etc.) and whether you will have the capacity to afford bigger repayments.

Compiling a budget now and for the future and monitoring your spending is a good way to gain a clear picture of your financial capabilities.

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