October 17, 2018

How Borrowing Capacity is Calculated

Before you start searching for a home it is a good idea find out your borrowing capacity.

This will tell you what you can afford to buy.

To work out what they can lend you, a mortgage lender will determine what you could afford to repay each month.

They do this by comparing your spending with your income.

Your income includes your salary, any income you receive from a rental property, and other income such as overtime, bonuses, and government transfers.

Your expenses include your living expenses and your repayments on any other loans.

Lenders will ask you detailed questions about how many dependents you have and costs for childcare, school fees, and private health cover.

If you have a credit card, they will also factor in your whole credit limit to figure out how big your repayments could get in the future.

Many lenders offer a borrowing mortgage repayment calculator on their website to give you a rough idea of what they would lend you.


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