In the current Auckland housing market, where many First Home Buyers are concerned that they may never even get on the property ladder the question of how much you SHOULD borrow often does not even come up.

However, just because the bank is willing to lend you the money doesn’t mean you should borrow that amount.

It is true that only you can answer this question as you are in charge of the budget. As a rule of thumb, it is recommended that you borrow no more than 80% of the property’s value and keep a provision for savings in the budget. This way, if your repayments increase because of an interest rate change, you have the resources to meet the increased repayment amount.

Further you should always try and pay a little more than what is required as per the mortgage agreement.

If you are considering borrowing a little more than what is the recommended amount for your personal situation, it will be advisable to try and put away the extra repayments while still renting and see if the household budget is still holding well.