How Much Can I Borrow?

Calculate your borrowing power

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How Much Can I Borrow Calculator

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Before You Buy: The Importance of Borrowing Power

The Secrets Of Borrowing Power And Maximising Your Mortgage Potential

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Borrowing Power FAQs

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What Is Borrowing Power?

Your borrowing power, also called borrowing capacity, is the maximum amount of money a lender is willing to lend you, based on your financial situation.

Before approving you for a refund loan, a lender will thoroughly assess your financial situation, looking at your income, expenses, existing debts, credit history and assets. The lender’s assessment will determine your borrowing power.

How Is Borrowing Power Calculated?

Your borrowing power is calculated as:

[(Net Monthly Income – Monthly Expenses) / Assessment Rate] x Loan Term in Months

If the calculation is too long and difficult to understand, we have a quicker alternative.

You can estimate your borrowing power by multiplying your annual gross income by 5 or 6. For example, if your annual gross income is $90,000, then your estimated borrowing power would be: 90,000 x 5.5 = $495,000

Please note that when calculating using the quick estimate, there are many factors that lenders will need to consider like:

Existing debts (credit cards, personal loans)
Living expenses
Number of dependants
Loan interest rate (with a buffer applied)
Loan term

What Should I Do If My Borrowing Power Is Lower Than Expected?

This can happen if you have high debt, a low credit score, a high loan-to-value ratio, high expenses or a small deposit.

If your borrowing power is lower than expected, you can take steps to improve your financial health and even explore alternative lending options.

This is where the expertise of a mortgage broker can help.

At Home Loan Experts, we can negotiate with lenders to secure competitive rates and terms, maximising your borrowing power and saving you money over the life of the loan. Call us on +000 XXXX XXXX or complete our free online enquiry form today.

What Factors Affect My Borrowing Power?

There are eight factors that affect your borrowing power:

Income: A higher and more consistent income could enable you to borrow more.
Debts and financial commitments: Large existing debts can decrease borrowing power.
Living expenses: High expenses may signal instability to lenders, lowering your borrowing power.
Credit history: A good credit history indicates reliability and may increase borrowing power.
Assets: Tangible and intangible assets add to credibility and borrowing capacity.
Deposit size: Larger deposits reduce lender risk, meaning you may be able to borrow more.
Home loan type, term and interest rate: Lower fees and interest rates increase borrowing power.
Value of the property: Property valuation influences the maximum loan amount.

How Much Can I Borrow For An Investment Property?

You can borrow up to 95% of the property value, but Lenders Mortgage Insurance (LMI) might apply if you borrow over 80%.

You might be able to borrow more than 95% of the property value with a guarantor or if you use equity from an existing property.

How Can I Improve My Borrowing Capacity?

Your borrowing power will depend on your income, family size, location, current debts, type of loan and the lender that you choose. The easiest way to increase your borrowing power is to choose a lender that can lend more to someone in your situation. Some banks are conservative when lending to investors, some use higher estimates for living expenses in their assessments, and others will lend you less if you have an interest-only loan. However, you can also change your situation to improve your borrowing capacity.

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