Borrowing Power Guide
Borrowing Power Guide
Get a rough guide to the factors that can affect borrowing power before speaking with a broker.
Use this borrowing power guide to understand some of the main factors that can affect how much you may be able to borrow.
Unlike a simple repayment calculator, borrowing power depends on more than income and interest rate. Lenders also consider expenses, debts, credit limits, dependants, loan purpose, property type, deposit, loan term and their own assessment rules.
This guide is designed to give you a starting point, not a formal borrowing capacity figure. Your actual borrowing power can only be confirmed after reviewing your full financial position and suitable lender options.
Check your borrowing pressure indicators
This tool does not calculate a formal borrowing capacity figure. It is designed to help identify factors that may strengthen or weaken your borrowing position before a proper lender assessment.
Guide result
Moderate pressure
Key factors affecting the result
Suggested next step
Review the full position with a broker before relying on the result.
This is a guide only and should not be treated as approval, pre-approval or lender assessment.
What affects borrowing power
Borrowing power is affected by more than your income.
Lenders may consider your income, living expenses, existing loan repayments, credit card limits, personal loans, car loans, dependants, deposit, loan purpose, property type and credit history.
They also apply their own assessment rules, including buffers to test whether the loan may still be affordable if interest rates increase.
A strong borrowing position usually comes from a mix of reliable income, manageable expenses, low unsecured debts, a suitable deposit and a loan structure that fits lender policy.
This is why two people with similar incomes can end up with very different borrowing results.
Why lender results can vary
Different lenders can assess the same borrower in different ways.
One lender may treat overtime, bonus income, self-employed income, rental income, credit limits or existing debts differently to another.
Some lenders may also have different rules for loan-to-value ratio, property type, location, interest only lending, investment lending or complex income.
This means a decline or low borrowing figure with one lender does not always mean every lender will reach the same result.
The important part is matching your situation to a lender that understands and accepts the way your income, expenses and loan structure work.
Why income is only part of the story
Income is important, but it is not the only factor lenders look at.
A higher income may help, but borrowing power can still be limited by high living expenses, credit card limits, car loans, personal loans, dependants or short remaining loan terms.
On the other hand, a borrower with a lower income but fewer commitments and a stronger deposit may sometimes be in a better position than expected.
Lenders are trying to assess whether the loan is affordable, not just whether the income looks strong.
This is why it is worth reviewing the full position before assuming how much you can or cannot borrow.
When to speak with a broker
It is worth speaking with a broker before assuming your borrowing power is too low or that you will automatically qualify.
A broker can help review your income, expenses, debts, deposit, loan purpose and lender options before you start making decisions.
This can be especially useful if you are self-employed, have recently changed jobs, receive overtime or bonus income, have investment debt, want to buy with a small deposit or have been told no by one lender.
A broker can also help identify practical ways to improve your position, such as reducing credit limits, restructuring debts, adjusting the loan amount or choosing a lender that better fits your situation.
The goal is to understand your real position before you rely on a rough estimate.
Want help understanding your borrowing position?
Use the guide as a starting point.
Use the guide as a starting point, then book a call or send us a message if you want help reviewing your income, expenses, debts, deposit and lender options.
We can help you understand what may be possible, what may be limiting your borrowing power and what steps could improve your position before you apply.