Why is my borrowing power lower than I expected?

Lenders test you at a buffer rate, usually about 3% above the real rate, so the assessed amount is lower than today's rate alone suggests.

Does my credit card affect how much I can borrow?

Yes. Lenders count your credit card limit, not just the balance, so a high unused limit can reduce your borrowing power.

Why do two lenders give me different amounts?

Each lender uses its own rules to assess income, expenses and debts, so the same person can be offered quite different amounts.

How much can I borrow? The honest answer | The Newcastle Mortgage Broker

“How much can I borrow?” is usually the first question buyers ask. It is the right place to start, because it tells you which homes are realistic before you fall in love with one you cannot finance.

What lenders look at

Your borrowing power is not one fixed number. Lenders weigh up:

Your income — how much you earn, and how steady it is
Your spending — your everyday living costs
Your debts — credit cards, car loans, buy-now-pay-later and so on
Your deposit — the more you have saved, the more doors open

Why the number is lower than you think

Here is the bit that catches people out. Lenders do not check if you can afford repayments at today’s rate. They add a safety buffer and test you at a much higher rate, in case rates rise. Let us look at Sam and Alex.

This is why a quick online calculator can leave you disappointed at the bank. It is also why two lenders can give you very different answers, because they each use their own rules.

Debts shrink your borrowing power fast

One surprise: it is your credit card limit that counts, not your balance. A $15,000 limit you never use can still lower what you can borrow. Clearing or lowering unused limits, and paying off small debts, can lift your borrowing power, sometimes by more than you would guess.

How to get a real number

A calculator is a start, but it cannot see your full picture. A short chat gives you a far more accurate figure, and we can match you to lenders whose rules suit your situation. That is the core of every home loan we help with.

Want a realistic idea of what you can borrow in Newcastle? Request a callback. Free, and no obligation.

This article is general information only and does not take your personal circumstances into account. Speak to a licensed mortgage broker for advice specific to you.