Borrowing Capacity: What Determines How Much You Can Borrow?

Lenders assess your borrowing capacity based on several factors:

• Income:  Salary, bonuses, rental income and other sources.

• Living expenses:  Lenders estimate your basic living costs and ask you to declare discretionary spending.

• Existing debts:  Credit cards (even unused limits), personal loans and car finance reduce your capacity.

• Number of dependents:  More dependants reduce your surplus income.

• Interest rate buffer:  Banks apply a buffer to ensure you can afford repayments if rates rise.

• Credit score:  A strong credit history increases your options.

  
  

Working with a broker can increase your borrowing power because they know which lenders use more generous living‑expense benchmarks or accept alternative income sources (e.g. overtime). They’ll also advise on reducing credit card limits or closing unused accounts to improve your serviceability.