BORROWING POWER · EAST MONEY GUIDE
How much can I borrow? What changes the answer
Borrowing power is an assessment of the complete household position under a lender’s rules. Understanding the main inputs helps you focus on the changes that can actually affect the result.
East Money · General information
Lenders assess usable income
Base salary is usually simpler to evidence than overtime, bonus, commission, rent or business income. Each lender may use different history, shading and verification requirements for variable income.
Limits and debts reduce capacity
Home loans, personal loans, car finance, HELP debt, buy-now-pay-later accounts and credit-card limits can all affect the assessment. The approved credit limit may matter even when the balance is zero.
- Current balances and monthly repayments
- Credit-card and overdraft limits
- Loans where you are a guarantor or co-borrower
- Ongoing child support or other commitments
Household spending and dependants matter
Lenders consider declared expenses and may compare them with minimum benchmarks. Accurate figures for housing, food, transport, education, insurance and dependants produce a more useful result.
The proposed loan is stress tested
Serviceability is usually assessed at a rate above the actual product rate. Loan term, repayment type and existing property debt also influence the calculation.
Improve clarity before changing anything
Closing a card, paying down a loan or changing a term can alter capacity, but each action affects cash reserves and flexibility. Model the likely impact before making a decision solely for an application.
QUESTIONS PEOPLE OFTEN ASK
Useful points to clarify early.
Why do lender estimates differ?
Lenders use different assessment rates, expense benchmarks and policies for income and existing commitments.
Will a pay rise increase borrowing power immediately?
It may, but the new income must be acceptable and supported by the evidence the lender requires. Probation or a changed employment structure may also matter.
Is a calculator result an approval?
No. It is an illustration and cannot test every document, policy or property detail.
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