Understanding your borrowing capacity.
Borrowing capacity is an estimate of how much a lender may be prepared to lend based on your financial circumstances.
It isn't simply based on your salary. Lenders may consider a range of information including income, existing commitments, living expenses, debts and the proposed loan.
What is borrowing capacity?
Your borrowing capacity gives you an indication of the amount you may potentially be able to borrow. Different lenders can assess the same financial circumstances differently, which is why it can be useful to explore your options.
A borrowing estimate is not a guarantee that a loan application will be approved. Final lending decisions are subject to the relevant lender's assessment criteria.
What can affect how much you can borrow?
A number of factors may influence the amount a lender is prepared to lend.
Income and employment circumstances
Existing loans and financial commitments
Regular household and living expenses
Credit history and existing liabilities
Deposit or available contribution
The proposed loan amount and property
Income and expenses matter.
Lenders generally look at your overall financial position rather than income alone. Your regular expenses and existing financial commitments can therefore have an important impact on your potential borrowing capacity.
Having a clear picture of your monthly income and expenses before starting the process can make the initial discussion much more productive.
What about your deposit?
Your available deposit is another important part of the property purchase equation. Depending on your circumstances, this may include savings and other acceptable sources of funds.
The amount available can influence the type of property purchase you can consider and the overall structure of your finance.
What should you do next?
Rather than focusing only on a single borrowing figure, it can be helpful to understand your broader financial position and what you are realistically comfortable repaying.
CapitalEdge Finance Group can help you explore the numbers and understand the potential finance options available for your circumstances.
Want to understand your options?
Let's have a conversation about your goals and explore what may be possible.
TALK TO CAPITALEDGE →