What is borrowing power?

Everything you need to know about borrowing power when it comes to home loans. From how it's calculated to what factors impact your borrowing capacity.

Getting an indication of how much you can borrow is an important part of the home buying journey. Your borrowing power will give you a better indication of what suburbs you should focus your search in, and types of homes you can afford.

What is borrowing power?

Borrowing power is the amount a lender is willing to loan you.

How is borrowing power calculated?

Every lenders will calculate your borrowing capacity in a different way – that’s why your borrowing capacity may vary from one lender to another. In most cases, a serviceability assessment will be completed to determine your borrowing capacity. Learn more about what a serviceability assessment is here.

What factors impact my borrowing power?

There are six factors that impact your borrowing power:

Learn about how these factors will impact your borrowing power here.

Can I increase my borrowing power?

By understanding factors that impact your borrowing power, you can also look at ways to increase it including:

  • Saving for a bigger deposit
  • Cutting back on discretionary spending
  • Repaying existing debt
  • Cancelling credit cards

Learn more about how you can increase your borrowing power here. Understanding your borrowing power is just the beginning when it comes to buying a home. Here are six tips to help you start your journey with confidence.

This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Please consider seeking financial advice before making any decision based on this information.‍

This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Please consider seeking financial advice before making any decision based on this information.

Unloan is a division of Commonwealth Bank of Australia.

Applications are subject to credit approval; satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000.

^ Unloan offers a 0.01% per annum discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. This discount is applied to each loan that you have with Unloan. If you have multiple loans (e.g. one investor and one live-in loan), they will each have a discount calculated based on when you settled each loan. Unloan may withdraw this discount at any time.

There are no fees from Unloan. However, there are some mandatory Government costs depending on your state when switching your home loan. For convenience, Unloan adds this amount to the loan balance on settlement.

* Other third-party fees may apply. Government charges may apply. Your other lender may charge an exit fee when refinancing.

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Calculations are not a loan approval. Applications are subject to credit approval, satisfactory security and minimum deposit requirements. Full terms and conditions will be set out in our loan offer, if an offer is made.

^Rates shown are inclusive of a 0.01% p.a. discount off our reference rate. On each anniversary of your loan’s settlement date, you will receive an additional discount of 0.01% per annum, up to a maximum discount of 0.30% per annum. For purchase loans with a Loan to Value Ratio (LVR) between 80.01% - 90% LVR, a lenders mortgage insurance (LMI) premium and higher interest rate apply. In some cases depending on the property’s location or type, LMI may also be required for LVR between 70.01% and 80%.

*Comparison rate is calculated on a $150,000 secured loan over a 25 year term. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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