Borrowing Power Calculator

Determining your borrowing power is a vital step in assessing the amount you can borrow for a home loan. It is calculated by deducting your expenses from your net income (income after tax). This includes daily living costs, financial commitments, and existing debts. The borrowing power calculator provides estimates that do not account for individual personal financial circumstances.

Understanding Borrowing Power

What is Borrowing Power?

Borrowing power, also known as borrowing capacity, refers to the estimated amount you may be able to borrow for a home loan. It’s a crucial factor in determining how much you can afford to borrow and what your home loan repayments will be. Your borrowing power is calculated based on your income, expenses, and other financial commitments. By understanding your borrowing power, you can set realistic expectations and make informed decisions about your home purchase. This knowledge helps you plan your loan repayments effectively and ensures you choose a home loan that fits your financial situation.

Calculate Your Borrowing Power for a Home Loan

Utilise Our Borrowing Power Calculator Tool

Our range of user-friendly home loan calculators to estimate your potential borrowing capacity. Current interest rates are essential for determining borrowing power and should be considered when using the calculator. Simply input your income and expenses to receive an accurate figure. This knowledge will empower you when house hunting, enabling you to set a realistic price range.

Factors Impacting Borrowing Power

Several factors can affect your borrowing power beyond income and expenses. Consider outstanding credit card or personal loan debts, credit limits, credit accounts, and credit history. Our expert home loan specialists can provide detailed insights into the elements that influence your borrowing capacity.

Your Earnings and Expenses

Your earnings and expenses play a significant role in determining your borrowing power. Lenders consider your annual income, including any additional income from investments or other sources. They also take into account your monthly living expenses, such as rent, utilities, groceries, and other essential costs. Additionally, any existing loan repayments, credit card debt, and other financial commitments are factored into the calculation. By providing accurate information about your earnings and expenses, you can get a clearer picture of your borrowing power and plan your finances accordingly.

Additional Costs to Consider

Lenders Mortgage Insurance (LMI)

Lenders Mortgage Insurance (LMI) is a one-off payment that may be required if you’re borrowing more than 80% of the purchase price of your home. LMI protects the lender in case you default on your loan repayments. The cost of LMI varies depending on the loan amount and the lender, but it can range from 1.5% to 3.5% of the loan amount. It’s essential to factor in the cost of LMI when calculating your borrowing power and home loan repayments. By considering LMI and other potential expenses, you can ensure that you have a comprehensive understanding of your financial obligations and make informed decisions about your home loan.

Getting an Accurate Estimate

To obtain a more precise borrowing capacity estimate, provide comprehensive and precise details in our calculator. Understanding your expenses is key, so take the time to evaluate and enter accurate information.

Please note that the calculator’s estimates do not include all potential fees, such as applicable bank fees.

Remember the Limitations

While our borrowing power calculator provides a useful estimate, it is not a guarantee of your final borrowing capacity. It does not consider your complete financial position or eligibility criteria for a home loan. For personalised guidance and a detailed discussion of your options, contact us to arrange a chat with one of our experienced home loan experts. Additionally, the calculator does not account for specific dates, such as the loan settlement date, which can impact rates and fees.

Plan Ahead with Confidence

By understanding your borrowing power, you can make informed decisions when planning your home purchase. Our team is here to support you throughout the process, helping you navigate the complexities and guiding you towards the best home loan options. When you’re ready, we invite you to Request A Free Lending Strategy Session.

It’s important to note that loan types and interest rates can vary significantly based on whether the property is classified as an owner-occupier or an investment property.