Many first-home buyers just can't quite afford the property they want in Sydney and Melbourne. People seeking to buy in the inner-city suburbs that are
well serviced by public transport should think about ditching the car.
"Maybe your car commitments are stopping your home aspirations. A relatively small car debt limits the extra capital that is often needed to buy in Sydney or Melbourne. Inner suburbs have good transport links which are continuing to improve, and car costs may be the last area that couples can change to get the loan size that they need.
By reducing your everyday expenses and any credit card limits, personal loans or car loans you can increase your borrowing power substantially," said Aaron Fuda, mortgage broker, at Omniwealth.
The effect of paying out car loan and reducing credit card limits by a couple on their borrowing capacity could lead to a further $100,000 being available:
The couple's increased borrowing power could allow them to afford that property they have always wanted but could not previously afford.
They exchanged only $20,000 of car loan debt for $100,000 worth of home loan borrowing power.