How Is My Borrowing Power Calculated?

Before you start house hunting, it is important to know how much you can borrow. This one number can shape your entire property journey.

Lenders look at more than just your income. They want to be sure you can repay the loan comfortably, even if interest rates go up. This is referred to as ‘loan servicability’.

Here is what they focus on:

• Your Income versus Expenses: They check how much you earn compared to what you spend. This includes everyday costs, existing loans and credit card limits.They also apply a three percent buffer on top of the current interest rate to see if you could still manage the repayments in tougher conditions.
• Debt-to-Income Ratio: This measures your total debt against your yearly income. Most lenders want this number to be under six. That means if you earn eighty thousand a year, your total debt should stay under four hundred and eighty thousand.
• Why It Matters: Understanding these numbers puts you in a stronger position. A few small changes to your finances could increase your borrowing power and open more doors.

We can help you get clear on your numbers and show you your options. To book in your 15-minute free, no-obligation digital consultation, click the link below:

• Book a Quick Chat
• Request a Call-Back