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What determines your borrowing capacity?

In this video I explain what I look at to determine your borrowing capacity.

There are two key things being surplus income and cash available for a deposit.

What I mean by surplus income is what you earn minus your living expenses and any existing liabilities (e.g. personal loan repayments, credit card payments, HECS debt payments etc.). Whatever is left over can be used to service your potential mortgage repayments and will determine how much a lender will allow you to borrow.

The banks won't lend you 100% of the property value so you also need to have funds available to put down a deposit and cover any purchase costs (e.g. stamp duty, settlement agent fees etc.). The maximum you can borrow for an owner occupied loan is 95% and 90% for an investment loan. These limits need to include any mortgage insurance premium (payable when borrowing >80% of the property value).

Get in touch if you want me to put the pieces together for you and work out your purchase budget.

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