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Frequently asked questions

• What is borrowing power?

  The term ‘borrowing power’ is used to describe how much you can borrow from a lender based on your financial situation. The more borrowing power you have, the higher credit limit or loan amount you are likely to get. Having a healthy deposit, strong credit history, and a low debt-to-income ratio generally means more borrowing power. Other factors such as loan terms and interest rates can also impact your borrowing power.

• How do you calculate borrowing power?

  Different lenders have their own formulas for calculating your borrowing power, but our useful online calculator can provide an estimate of how much you might be able to borrow. Keep in mind that factors other than your credit history or hard financial numbers can impact your borrowing power. Your lender may look at things like your number of dependents, or any resale risks associated with the type of purchase you are looking to make.

• Does my deposit amount affect my borrowing power?

  When it comes to home loans, your deposit amount can impact your borrowing power. All other things being equal, the higher your deposit amount, the more borrowing power you have. For a 30-year mortgage with a low interest rate, some lenders may want to see somewhere between a 10-20% deposit. Other lenders offer home loans requiring as little as a 5% deposit. While this may mean a slightly higher interest rate, it could help you get into your new home sooner.

• Can I increase my borrowing power?

  As the borrowing power calculator shows, how much you can borrow depends on a range of factors including your income, assets, and current living expenses. If the calculator did not give you the answer you were hoping for, it might be time to make some adjustments to increase your borrowing power. Speaking with a Liberty Adviser is a great first step.