Borrowing capacity is one of the first questions borrowers ask when planning to buy property. The answer depends on more than just your income.
Lenders assess your overall financial position, including income, expenses, debts, credit conduct and loan purpose.
What is borrowing capacity?
Borrowing capacity is an estimate of the maximum amount a lender may allow you to borrow based on your financial situation and the lender’s assessment criteria.
What affects borrowing capacity?
Lenders may consider:
- Income and employment type
- Overtime, bonuses or commission
- Business income for self-employed borrowers
- Existing home loans, personal loans and car loans
- Credit cards and buy now pay later facilities
- Living expenses
- Dependants
- Deposit and savings history
- Credit score and repayment conduct
Why borrowing capacity changes between lenders
Different lenders use different policies, assessment rates and income treatment. A borrower declined by one lender may still have options with another lender, depending on the scenario.
Why pre-approval is useful
A borrowing capacity estimate is helpful, but a formal pre-approval can provide greater confidence before making an offer.
How Nine Fincap can help
Nine Fincap assesses your position and compares suitable lender options so you can understand your realistic borrowing capacity before committing to a purchase.
Want to know how much you may be able to borrow? Start Pre-Approval with Nine Fincap.
Disclaimer
Borrowing capacity estimates are indicative only. Formal approval is subject to lender assessment, verification and property valuation.