How much can I borrow?

Borrowing power refers to the amount of money a lender is willing to lend you based on your financial situation. It depends on various factors such as your income, expenses, credit score, and the type of loan you’re applying for.

Your borrowing power is typically determined by a lender using the following factors:

• Income: Your salary, wages or any other regular income you receive.
• Expenses: Monthly living costs, including existing debts, utilities and other regular expenses.
• Credit score: A reflection of your financial history and ability to repay debts.
• Current debts: Any outstanding loans, credit cards or other liabilities.
• Deposit amount: The amount of money you can contribute toward the purchase or loan.
• Loan type and term: The kind of loan and the length of time you plan to borrow.

To improve your borrowing power, consider the following steps:

• Reduce your debt. If you can, you should repay or decrease current loans. This assures lenders that you are in a better financial position to focus on repaying your home loan.
• Save for a larger deposit. A larger deposit can increase your borrowing power. A higher deposit reduces the lender’s risk, which may result in a more favourable loan offer. It also lowers the loan-to-value ratio (LVR), which can be crucial in securing a larger loan amount.
• Reduce your credit limit. While having a credit card isn’t inherently problematic, a high credit limit could negatively impact your borrowing power. Even if your card balance is zero, the potential to owe the full limit may be considered a liability. Consider reducing your credit limit or consolidating multiple cards into one, and closing any unnecessary credit lines.
• Cut down on non-essential expenses. Assess your current lifestyle and identify opportunities to reduce any possible expenses.
• Choose the right loan product. Every lender has their own way of assessing your borrowing capacity—and at Brighten, we offer a range of products designed to suit different needs and circumstances. Whether you’re self-employed and need flexible income verification, or you’re looking for support with a non-traditional credit history, we have options to help. Our goal is to match you with the right solution so you can move forward with confidence.

Yes, your credit score is a key factor in determining your borrowing power. A higher credit score suggests to lenders that you are less of a risk, which can increase the amount they are willing to lend you. A lower score, on the other hand, may reduce your borrowing power or lead to higher interest rates.

Yes, your borrowing power can change based on several factors, including fluctuations in your income and changes in your expenses, your savings or your credit score. Additionally, if interest rates increase, your borrowing power might decrease.

The type of loan you’re applying for can affect your borrowing power. For example, a home loan for a primary residence may offer higher borrowing power compared to an investment loan, as lenders often consider investment properties to be higher risk. Additionally, the loan term (ethe length of time you have to repay the loan) can impact your borrowing capacity, with longer terms often allowing you to.

Yes, applying with a co-borrower (such as a partner or family member) can increase your borrowing power. Lenders will consider the combined incomes and financial positions of both borrowers, which could potentially allow for a larger loan.