Borrowing Power Calculator

Your Estimated Borrowing Power

This calculator is here to give you a helpful estimate of how much you might be able to borrow from a lender. Think of it as a starting point to understand your potential, based on the basic income and financial commitments you provide.

It's important to know that every lender uses their own unique way to calculate borrowing power, so the figure you see here might differ from what another lender offers. You'll get your precise borrowing amount for sure once you complete a full application and receive conditional approval for a loan.

How We Calculate Your Estimate: Key Assumptions

To give you this estimate, our calculator uses some standard assumptions. These help simplify the complex lending process into a quick tool.

• Fees and Charges: This calculation doesn't include any potential upfront or ongoing fees that might be associated with a loan.

• Interest Rate Stability: We've assumed that the interest rate you input remains constant throughout the entire loan term. In reality, interest rates can change over time.

• Interest Calculation: For simplicity, we calculate interest by compounding it at the same frequency as your chosen repayments (e.g., weekly, fortnightly, or monthly). In practice, a lender's exact interest compounding schedule might differ slightly from your repayment schedule.

• Year Length: For calculations involving weekly or fortnightly repayments, we consider a year to have 364 days (52 weeks or 26 fortnights) rather than 365 or 366 days. This is a common practice in loan calculations for consistency.

• Rounding: Our calculations are performed without rounding until the very end. In real-world loan repayments, amounts are typically rounded to the nearest cent.

• Interest Rate Buffer: To help ensure you could still afford your repayments if interest rates rise, many lenders apply an "extra" interest rate (often called a buffer) when calculating your borrowing power. Our calculator reflects this by using the greater of your input interest rate plus a 3% buffer, or a minimum "floor rate" of 5.75%. However, the actual repayments and total interest shown for your estimated loan amount are calculated without this buffer.

• Living Expenses: Your estimated living expenses, or a standard Household Expenditure Measure (HEM) amount (which many lenders use), will be taken into account – whichever is higher – to calculate your borrowing power. This ensures a realistic assessment of your capacity to repay.

We hope this provides a clearer understanding of your estimated borrowing power! If you're ready to discuss your specific circumstances and get a precise figure, please don't hesitate to contact a qualified mortgage broker.