How Much Can I Borrow for a Home Loan?🐾

One of the most common questions I get is:

“How much can I borrow?”

The short answer is:

It comes down to serviceability.

(If you missed it, I covered serviceability in a previous video here 👇🏻)

In simple terms, lenders look at:

• how much income you earn
• how much you spend
• what debts you already have
• and how much money is left over to comfortably repay a loan

How Do Banks Calculate Home Loan Borrowing Capacity?

At the core of it, borrowing capacity is about:

Income vs Expenses

If someone has:
• high income
• low debt
• manageable living expenses

They will generally have a larger borrowing capacity.

On the flip side:

If someone has:
• lower income
• higher debts
• larger monthly commitments

Their borrowing capacity will usually be lower.

What Affects How Much You Can Borrow for a Mortgage?

There are a number of things lenders assess, including:

• salary or business income
• existing loans and credit cards
• car finance
• HECS/HELP debt
• dependants
• living expenses
• interest rate buffers

Even things like unused credit card limits can affect borrowing power.

How Does Serviceability Affect Home Loan Approval?

Serviceability is essentially the lender asking:

“Based on your current financial position, can you comfortably afford this loan?”

And importantly — lenders don’t assess repayments at just today’s interest rate.

They usually apply a buffer above the actual rate to make sure the loan is still affordable if rates increase.

Can a Mortgage Broker Help Increase Borrowing Capacity?

Sometimes, yes.

Different lenders assess income and expenses differently.

That means borrowing capacity can vary depending on:
• lender policy
• loan structure
• the type of income being used

This is where a broker can help compare options and find the most suitable fit for your situation.

The Bottom Line on How Much You Can Borrow

Borrowing capacity isn’t just about income.

It’s about the overall picture:
• income
• debts
• expenses
• structure
• lender policy

If you’re curious about what your borrowing capacity might look like, or you want to understand what options are available, happy to have a chat.

👉 Learn more here:
https://www.mortgagemuster.com.au/refinance

Or feel free to reach out for a no-obligation chat.

— Iain & Dave
Mortgage Muster