How much can I borrow?

If you’re getting ready to take the next step in your home buying journey, it’s a good idea to chat to a Home Finance Manager about your situation and the ins and outs of your borrowing power. They can help you build up a detailed picture of your financial situation and make sure you’re getting an accurate view of how much we could lend you.

In the meantime, here are some common factors that can influence the amount you could borrow.

Your deposit

This is an obvious one, but having a healthy deposit saved up could help you borrow more.

Generally, you’ll need a deposit of 20% of the property value. If your deposit is less than 20%, you may need to pay Lenders’ Mortgage Insurance (LMI).

Find out more about how much you need for a deposit.

Reduce your credit card limits

A limit is the maximum amount you can spend on a credit card or store card. Even if you’re not using your full limit (or limits, if you have multiple cards) having a high total credit limit can work against your borrowing capacity, as it can be viewed as a potential debt.

So If you don’t need your full limit, you could consider reducing it.

Become a better saver

It’s important to show that you’re a responsible saver and can manage your money over a long period. This helps lenders see that you’ll be able to manage your ongoing home loan repayments.

At the same time, cutting back on some unessential spending and lowering your living expenses could also increase the amount you can borrow.

Take a look at some tools to help you save effectively.

Choose a longer term

A longer home loan term (think 30 years instead of 25), means your regular repayments will be lower each month (or week, or fortnight). Having lower repayments over a longer period generally means you’ll be able to afford to repay a larger loan.

While this may increase your borrowing power, keep in mind, this also means you’ll pay more interest over the lifetime of your loan.

Check your credit score

Your credit score will typically be used when assessing how much you can borrow, so it might be worth checking your score – and, if faced with any surprises, doing what you can to fix them.

Make sure you know exactly where you stand

Our calculator is great to get an estimate of your borrowing power, but going through the detail with a Home Finance Manager will make sure you’re on the right track.

Once you understand how much you could borrow, your next steps will depend on where you are in your home buying journey. Here are some actions you may want to consider next:

• Understand and budget for the upfront fees and costs that come with buying a house
• Find the right home loan for you, based on your situation
  
• Check what your ongoing repayments might be
  
• Arrange pre-approved finance with a Home Finance Manager. This puts you in a strong position when the right home comes along.
  
• First home buyer? Look no further, we’ve got everything you need to know in one place - Our ultimate first home buyers checklist.