Borrowing Capacity

Your borrowing capacity is something you need to know before you commence your property search as it tells you how much you can spend on your new home and where you can afford to live. Many borrowers go a step further and pre-approve their loan prior to commencing their property search to confirm how much they can borrow.

Your borrowing power or borrowing capacity is a good place to start when purchasing property as it will give you an idea of how much you can afford to borrow. Knowing how much you can afford to borrow will help you stick to budget with your property search.

find out Your maximum borrowing capacity

For an obligation free assessment of your borrowing capacity or to talk to a mortgage broker about the home finance options that are in your best interest, call us on 0508 722 205 (+64 9 526 0122) or complete the form on this page.

How do lenders assess my borrowing capacity?

A lender will typically review all your income sources and expenditure, add a margin, and then calculate your uncommitted monthly income. This is the most important factor to most lenders. The greater it is, the larger your borrowing capacity will be.

Because different banks and lenders have different lending criteria, your borrowing capacity will vary between lenders. As a guideline, banks and lenders will look at a number of criteria when assessing your borrowing capacity, these include:

• Loan to Value Ratio (LVR)
• Income and types of income, e.g. casual, contract, full-time
• Credit card limits
• Loan terms
• Number of dependents
• Type of Loan
• Tax rates
• Rental income
• General living expenses
• Existing asset position, including the size of your deposit
• Any property currently or previously owned
• The type of property you are looking at (e.g. house, apartment).

Tips for increasing your borrowing capacity 

You may be able to purchase your first home sooner; follow these handy tips to increase your borrowing capacity:

• Pay off any existing loans
• Pay off or try to reduce any credit card, overdraft or line of credit facilities
• Plan and stick to a budget to improve your deposit and savings history



Calculate your borrowing capacity

Check out our How Much Can I Borrow calculator for a rough assessment of your borrowing capacity. For a more detailed assessment of your situation or to find the loan that is in your best interest, talk to your local mortgage broker or call us at any time on 0508 722 205 (+64 9 526 0122).