Online calculators give you a rough idea of your borrowing power, but two lenders can give the same person quite different answers. Here’s what sits behind the number.
Your income
Lenders start with your regular income. Base salary is usually counted in full. Overtime, bonuses, commissions, casual work and rental income are often only partly counted, and each lender treats them differently. If you’re self-employed, read our self-employed guide.
Your living expenses
You’ll be asked for a realistic picture of what you spend: groceries, transport, insurance, childcare, subscriptions and so on. Lenders compare your figures with a benchmark for a household like yours and generally use whichever is higher. Expect them to look at your bank statements.
Your existing debts
- Credit cards: lenders usually assess the full limit, not the balance. A card you never use can still reduce what you can borrow.
- Personal and car loans: the repayments are counted.
- Buy now, pay later: these accounts show up too.
- Study loans (HELP/HECS): compulsory repayments reduce your take-home pay, so they count.
The rate buffer
Lenders don’t test whether you can afford the loan at today’s rate. They test at a higher rate, to check you could still manage if rates rose. This buffer is one of the main reasons the amount you can borrow may be lower than you expect.
Your deposit and the property
The size of your deposit, the type of property and its location can all affect how much a lender will offer, and on what terms.
Simple ways to put your best foot forward
- Lower or close credit card limits you don’t need.
- Pay down small debts where you can.
- Keep your accounts tidy for a few months before applying.
- Hold off on new debts or job changes just before you apply, if possible.
Get a real figure
Our calculators give you a starting point. For a figure based on actual lender policies, book a free 15-minute chat.
This article is general information only and doesn’t take your personal circumstances into account.