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:

Your income
Your debt and expenses
Your saving history & deposit amount
Your credit history
Type and length of home loan
Property you’re looking to purchase

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.‍