Six numbers before buying a home
Price is only the first number. Work through deposit, completion cash, monthly affordability, rate risk, rent-versus-buy cost and later mortgage choices.
Who this is for: For first-time buyers, high-LTV applicants and anyone still comparing renting with buying.
- 1
Affordable price is not the bank maximum
Work backwards from stable income, essential spending and existing debt. A lending limit is a risk rule, not a household budget recommendation.
Remember: Leave saving capacity even if rates rise by one point.
Calculate mortgage cost - 2
Cash needed beyond the deposit
Stamp duty, commission, legal fees, renovation, mortgage insurance and valuation gaps can all appear around completion. Do not drain the account.
Remember: Keep an emergency reserve and first-year repair budget after completion.
Test high-LTV financing - 3
Monthly housing cost beyond repayment
Management fees, rates, insurance, repairs and transport differences do not appear in the bank repayment. Add them to cash flow.
Remember: Compare full housing cost with income, not repayment alone.
Stress-test affordability - 4
Rent is not automatically waste, and buying does not guarantee gains
Compare deposit opportunity cost, interest, rent, transaction costs and holding period. Short ownership makes transaction costs harder to absorb.
Remember: Test flat prices and an earlier move.
Compare rent and buy - 5
Run a downside case before completion
Test a rate rise, temporary income drop and unexpected repair together. Surviving several difficult months matters more than an average year.
Remember: Set conditions that would reduce the price budget.
Complete the buying route - 6
Compare refinancing and prepayment after moving in
Penalty periods, cashback, legal fees and old versus new rates change the answer. Prepayment saves interest but reduces liquidity.
Remember: Keep emergency cash before comparing a shorter term with lower payments.
Compare prepayment
Work through the chapters in order, but return whenever your income, rates or goals change.