The amount one can borrow depends primarily on income, expenses, credit history, existing debts, savings, deposit, and the lender's criteria. Borrowing power is the maximum amount that a bank or lender might lend based on these factors. Key points:
- Lenders assess income (salary, bonuses), existing debts (loans, credit cards), expenses (bills, childcare), deposit/savings, and credit rating to determine borrowing capacity.
- The borrowing amount must be affordable enough so that monthly repayments can be comfortably covered by net income.
- A good credit score, lower existing debts, and a solid savings history can increase borrowing capacity.
- For mortgages, lenders also check if repayments can be maintained if interest rates rise.
- Joint applications (e.g., with a partner) may increase borrowing because both incomes are considered.
- Borrowing calculators provided by banks like Westpac, HSBC, Halifax, Nationwide, Santander, and others can estimate borrowing amounts based on entered financial details.
- Additional factors like residency status or property type may affect borrowing limits.
- It is advised to get a personalized estimate or Agreement in Principle from lenders for a precise borrowing limit.
In summary, there is no fixed universal borrowing amount; it varies individually based on financial details assessed by lenders. Calculators from financial institutions or consulting directly with a lender provide the best estimate of how much one can borrow.
