How lenders look at borrowing capacity

Lenders generally consider your income, regular expenses, existing debts, credit card limits, dependants, deposit and the proposed loan. They also assess whether you could manage repayments if interest rates or your circumstances change.

A calculator can provide a useful starting estimate, but it is not an approval or a guarantee of what a lender will offer. Use our borrowing power calculator first, then speak with Logos Loans if you want to work through the result.

Your borrowing position may also be affected by HECS-HELP debt, overtime, bonuses, rental income, company or trust income and the way a lender assesses living expenses.

Plan for more than the deposit

Buying costs may include stamp duty, conveyancing, building and pest inspections, lender fees, registration fees and possible Lenders Mortgage Insurance. The amount depends on the property price, location, loan structure and your eligibility for any concessions.

If you are buying in NSW, check current government information for the rules that apply to your circumstances. Our deposit calculator can help you estimate the loan required and possible buying costs, but it should not replace a confirmed quote or professional advice.

What do LVR and LMI mean?

LVR, or loan-to-value ratio, is the loan amount compared with the lender’s accepted value of the property. A higher LVR generally means you are borrowing a larger proportion of the property value.

LMI, or Lenders Mortgage Insurance, may apply when a lender considers the LVR higher than its preferred threshold. It protects the lender, not the borrower, and can be added to the loan in some circumstances. The cost and eligibility depend on the lender and your application.

Compare the trade-offs

A fixed rate can provide repayment certainty for the fixed period, but it may limit features such as extra repayments or an offset account. Break costs may also apply if you refinance, sell or change the loan during the fixed period.

A variable rate may provide more flexibility, but repayments can change as rates move. Neither option is automatically better. Consider your plans, cash flow, loan features and how long you expect to hold the loan before making a decision.

Finance for building or renovating

Construction loans are commonly paid in stages as work progresses, rather than released as one upfront amount. The lender may require plans, a fixed-price building contract, approvals, an inspection and valuations before approving each drawdown.

Budget for variations, site costs, delays and interest during construction. Requirements differ between lenders and projects, so get the finance structure checked before signing a building contract. Logos Loans can help you understand the lending process and information required.

What lenders may need

Self-employed applicants may be asked for tax returns, financial statements, ATO information, business activity statements and evidence of ongoing income. Lenders can treat add-backs, retained profits, company income and trust distributions differently.

There is no single rule for every business structure. A conversation before applying can help identify the documents and lending options worth considering. This guide is general information only and is not accounting, tax or legal advice.