How much can I borrow?

Borrowing power refers to the amount that a lender, like a bank, is likely to lend you when you take out a loan. When you're looking to buy a house, knowing your borrowing power is often the first step.

A lender considers many factors when assessing your borrowing power. Such as;​

• Your deposit (how much you can contribute to the loan)
• Your income and income type (like if you're a small business owner or a contractor)
• Your expenses and spending (like your bills and discretionary spending)
• Assets and liabilities (like your car or other properties and other debt, like credit cards)
• Credit history (including your current debt and ability to pay it off)

Outside of increasing your income, you could look for ways to lower your expenses and spending as well as saving a larger deposit. Other things, like improving your credit history and lowering your credit card limit might help too.

The purpose of the loan will impact your ability to borrow because a lender will also need to consider potential income or expenses associated with an investment property. Your personal income and expenses will still factor in to your borrowing power because a lender will want to ensure that you don't go in to financial hardship if things go badly, like your investment property goes unleased for a long period of time. 

Ultimately, your relationship status does impact your borrowing power, particularly if you have dependants or live together and share things like expenses, other debt or assets together.

Your investment property will definitely be considered when a lender assesses your borrowing power. However, whether this improves or adheres your borrowing power will depend on many things, like whether the property is positively or negatively geared, the property value and your current loan. The best way to find out, is to chat to a Home Lending Specialist who can give you a better idea based on your circumstances.

When it comes to buying a house, you'll need to save a deposit and enough for other costs like stamp duty, inspection fees, house insurance, moving costs, bank fees and legal/settlement agent fees. You can read more about home buying costs in our guide to upfront home buying costs.

If you haven't already, make sure you chat to a Home Lending Specialist about next steps and getting Approval in Principle. Approval in Principle will give you confidence, and appear more attractive to sellers as you make offers on houses.