Factors that affect your Borrowing Power

When you are looking to purchase a home, the first thing that comes across your mind is the amount that you can borrow. Once you are aware of your borrowing power, you can look for a property within that price bracket.

What is your borrowing power?

Your borrowing power is the amount that you can get from any lender. This amount may vary from one lender to another and might be affected by various factors. You can also look for options that can help you increase your borrowing capacity.

Lenders need to ensure that their amount is safe with you and therefore, they weigh all your assets and your disposable income before disbursing the loan amount.

Depending upon the amount that you can borrow, you can find a suitable property.

Factors Considered when Taking a Loan

Lenders usually consider the following factors before arriving at and disbursing any amount. They want to ensure that you have enough money or a reliable source of income that will be used to repay the loan. Here are the factors that they consider:


Your income is the first thing that is considered when you set out to seek a loan. The income is the figure that will be used to disburse the mortgage payments. For those that are seeking a joint loan with their spouse, the loan amount is higher as their ability to pay back the mortgages is higher. Similarly, the number of dependents that you might have also has a bearing on your borrowing capacity.

People with high income but with equally more number of dependents might be able to get the same loan amount as that of a person whose income is lower but has no dependents.


The deposit is the amount that you need to pay initially when you set out to purchase a property. If you are able to make a high deposit, the loan amount required would be less. Moreover, the lender would be assured that if paying a high deposit is not difficult for you, it would not be difficult for you to make the mortgage payments as well.

Credit Score

An important factor that helps in ascertaining your borrowing capacity is your credit score. A person having a good credit score indicates that he/she is a responsible person who repays the debts on time. A good score can get you higher loan amount as the lenders are assured of your ability and attitude to repay on time.

Depending upon your lender, you might get a higher loan amount for a good credit score or you might be charged a lower interest. However, this is something that needs to be reviewed once your credit score is available.

Comparison is the key to getting the best deal

You can compare the loan amount that will be available to you from different lenders by using the same factors. Online websites like iSelect help you compare the loan amounts available from various lenders. You can check out your borrowing power and the available amounts by clicking on https://www.iselect.com.au/home-loans/how-much-can-i-borrow/.

Clare Louise

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