Debt Management and Leverage

Residential property mortgages

Things to consider

Most lending organisations have limits on the amount you can borrow.

This can be affected by the income you earn, what other debts you have, the amount of deposit you have, and what the value of the security is.

For example a lender would not normally let you borrow $300,000 secured by a property worth $200,000. In this situation, if you were to default on your loan, the bank would receive a $200,000 asset as payment of their $300,000 debt.

With this overview, it is time to move on to calculating repayment levels and borrowing to invest.