Factors that determine borrowing amount

A home loan guide to how much you can borrow

The amount that you can borrow to buy a property is determined by a number of factors. Check out our home loan guide to figure out how much you may be able to borrow.

What factors determine how much you can borrow?

• Your income and commitments
• Your lifestyle and living expenses
• Your property
• Your loan interest rate, the term and type
• Any assets you offer as security (for example, another property)
• The value of your property
• Your credit history

 Your income and commitments

Before going ahead with a loan, it is important to have your repayment capacity assessed. If you are applying for the loan jointly with another person, your repayment capacity may be greater, which can mean greater borrowing power. Your commitment level takes into account all debts currently outstanding, including credit and store cards, personal loans, and car hire purchase or lease agreements, and any other ongoing payment commitments.

 Your lifestyle and living expenses

You'll need to take a close look at your living expenses, to ensure you can realistically afford the repayments and maintain a standard of living you are comfortable with.

 Your property

The amount you can borrow depends on the value of your property. This value is determined by your lender, and is not necessarily the advertised or purchase price of a property.

 Your loan interest rate, the term and type

The amount you can borrow may also depend on the interest rate and the term of your loan. The lower the interest rate, the lower your repayments will be. A longer-term loan will mean lower repayments, but a shorter-term loan may save you interest. You need to think carefully about what is most important to you.

 Your credit history

Your credit history is also very important and will be checked by a lender when assessing your loan application. It takes into account your previous record of repaying loans and credit cards.

If you are unsure about your credit history, it is worth checking before applying for a loan. From there, you can take steps to improve or correct it if necessary - for example, by clearing an unpaid debt. To obtain a copy of your credit reference report, you can contact Veda Advantage Ltd at the following address:

Public Access Division
Veda Advantage Ltd
PO Box 964
North Sydney
NSW 2059

Ph: (02) 9464 6000