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Mortgage serviceability: how to play the game

What do banks want to know for my borrowing capacity?

Mortgage Borrowing Capacity: What Lenders Look For and How to Prepare

Why Is Borrowing Capacity So Important?

Your borrowing capacity determines how much you can borrow for a home loan. It’s one of the first things lenders calculate—and it can make or break your property plans. But what factors influence this number? And how can you improve it?

The Key Factors That Impact Borrowing Capacity

1. Your Income

Lenders assess your income sources, including salary, bonuses, rental income, and other streams. The higher and more stable your income, the better your borrowing power.

2. Your Expenses

Living costs matter. Lenders review your spending on groceries, utilities, childcare, and discretionary items. Reducing unnecessary expenses can boost your capacity.

3. Existing Debts

Credit cards, car loans, and personal loans reduce your borrowing power. Paying down debts before applying can make a big difference.

4. Interest Rate Buffers

Lenders apply a “stress test” by adding a buffer (usually 3%) to current interest rates. This ensures you can afford repayments even if rates rise.

5. Loan Term and Structure

Longer loan terms can reduce monthly repayments, improving affordability. Features like offset accounts or redraw facilities may also influence lender decisions.

Other Considerations

  • Property type and location
  • Owner-occupied vs investment loan
  • Current lending policies and regulations

How to Improve Your Borrowing Capacity

  • Pay off or reduce existing debts
  • Cut back on discretionary spending
  • Build a strong savings record
  • Work with a mortgage broker for tailored strategies

Ready to Maximise Your Borrowing Power?

At https://cbmmortgages.comCBM Mortgages, we help you understand your borrowing capacity and find the right loan for your goals.

👉Look at our calculators page for all things related to property
👉 Read more on our blogs https://cbmmortgages.com/blog/

📞 Contact us today to start your home loan journey with confidence!

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Disclaimer

This article provides general information only and does not constitute financial advice. Always consult a qualified financial advisor or mortgage broker before making any financial decisions.

Written by Craig McDonald 08.10.2025