How much can I borrow?

It’s how much money you’re able to borrow from a lender to buy a property. The more you could borrow, the higher your borrowing power.

There’s a range of things that affect how much you could borrow. In fact, if you have a play with our 'How much can I borrow’ calculator above, you’ll get a sense of how your borrowing power can go up and down depending on the information you input.

If you want to a more accurate dollar figure, have a chat to a Home Lending Specialist about your individual circumstances.

In the meantime though, here’s an overview of some common things besides income and expenses that could have an impact on your borrowing power.

Your deposit

Generally, the bigger your deposit in relation to the value of the property you want to buy, the more you could potentially borrow.

Take a look at our FAQ – how much deposit do I need?

Your credit score

Lenders will look at your credit score (also known as your credit rating) when deciding whether to lend you money. It’s based on things like how much you’ve borrowed in the past, your previous applications for credit and if you’ve missed payments on things like credit cards, bills or loans. You can find out more – and even check your credit score – on the government’s MoneySmart website.

Your credit card limits

Lenders will take into account the maximum amount you can spend on a credit card or store card, even if you’re not using the full limit.

The property valuation

When you apply for a home loan, your lender might carry out a valuation on the property you want to buy, which could determine how much money they’re prepared lend you.

The home loan type, term and purpose, and your repayment type

Different home loans come with different interest rates – and so do loans for a property to live in vs. for an investment purpose. This affects your regular home loan repayment amount, which can have an impact of how much you could borrow.

Similarly, the length of your loan term (for example, 25 years or 30 years) and your repayment type (principal and interest or interest only) have an impact on your regular repayment amount – which can also cause your borrowing power to increase or decrease.

Your savings

The amount you have in savings can show the lender that you can manage your money and could handle ongoing home loan repayments.

Want to explore ways to maximise how much you could borrow? Take a look at our FAQ below – how do I increase my borrowing power?

The amount you could borrow might go up or down depending on a number of factors related to the property you want to buy. For instance:

• Potential rental income from an investment property you want to buy
• Expenses associated with owning and maintaining an investment property vs. a property to live in
• Loans for an investment purpose generally come with a higher interest rate than loans for a property to live in, which can potentially affect your regular repayment amount. In turn, this could have an impact on how much you could borrow.

For a more accurate and comprehensive view of how the property you want to buy could affect your borrowing power, it’s a good idea to get in touch with a Home Lending Specialist.

Your borrowing power might go up or down depending on things like:

• The rental income you receive from the investment property
• The expenses involved in maintaining it
• If you still owe money on your existing home loan(s).

Our Home Lending Specialists can talk to you about your individual circumstances and how your investment property could impact your borrowing power.

This can largely depend on your individual or combined income and expenses. Also keep in mind that lenders will usually take the debts of everyone on a home loan application into account when they work out how much they could lend you.

Our Home Lending Specialists can talk to you about how much you might be able to borrow based on your situation.

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 Lending Specialist 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 Lending Specialist 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 might 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 Lending Specialist. 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.
  

Here’s a rundown of the costs usually involved when you buy a home:

• Stamp duty
• Title transfer fee
• Title search fee
• Mortgage registration fee
• Conveyancing fees
• Lenders’ Mortgage Insurance (LMI)
• Building insurance, as well as contents and portable contents insurance – find out more about home insurance
• Loan application fee, and other bank fees and charges – check what they are with your lender
• Property valuation fees
• Moving costs
• Ongoing costs like home loan repayments, strata fees, council rates, utilities and property maintenance.

Our guide to upfront home buying costs can help explain some of these fees. You can also estimate what some of these costs will add up to with our home loan fees calculator.