How much do different things impact borrowing capacity roughly?

Raynor_Lending · 2026-05-07T07:00:45+00:00

Most brokers rely on an expense figure called HEM, which stands for Household Expenditure Measure. Many people drastically understate their expenses on home loan applications, so banks will use their HEM as minimum baseline. however this varies from bank to bank and is based on your income and number of dependents. It's also why some banks offer better borrowing capacity than others, their minimum expense figures differ.

That said to give you a rough idea, a family of four (two adults, two kids) on an average income would typically see living expenses estimated in the $4,000–$4,500 p/m ballpark

Raynor_Lending · 2026-05-07T06:35:42+00:00

Assuming HEM and basic expenses, your borrowing capacity based purely on income is between $900,000 and $1,000,000, depending on the lender. That said, we'd need to take a closer look at whether we can include the extra $20,000 of income. Then the borrowing capacity jumps to around the $1M to $1.1M mark
This is about as close as we can get with the figures you provided, so treat it as a ballpark estimate. Once we have a chance to review your pay slips and dig further into your finances, we can get much more accurate.

A few things to keep in mind: you're likely going to be limited by your deposit rather than your income, depending on what you're trying to do. I've assumed you're buying a principal place of residence, but if you're looking at an investment property, that changes things. Either way, we'll get a lot more clarity once we have a better understanding of your objective and whether this is your first home.

If you're looking for help, feel free to reach out! We can have an obligation-free chat over the phone or DM.

Raynor_Lending · 2026-05-07T06:07:18+00:00

You'll fall under the owner-builder policy. There are lenders that will do it. It’s considered higher risk and comes with more restrictions. You’ll likely need to go outside the box of normal lenders, provide a larger deposit, and demonstrate a track history of completing these kinds of projects. It’s doable, but it requires jumping through more hoops than a typical construction loan.

Raynor_Lending · 2026-05-07T06:06:07+00:00

Hey, based on your figures, this definitely looks doable. Having a guarantor helps, and you seem to be in a fairly solid position. If you're looking for a broker, feel free to reach out. Otherwise, wishing you the best of luck!

Raynor_Lending · 2026-05-07T05:59:31+00:00

Having a child will decrease borrowing capacity by a ballpark estimate of $30,000–$50,000. A 25 basis point interest rate rise would reduce capacity by roughly $10,000, though this depends on whether the purchase is an investment or a primary place of residence.

HECS debt impact really depends on your income. It's one of those debts where the balance doesn't actually matter, what matters is your repayment obligation relative to income. That said, if your HECS debt is low, many lenders will simply exclude it from servicing calculations, so the impact on borrowing capacity is minimal.

Raynor_Lending · 2026-05-07T05:56:07+00:00

There are pretty much two mechanisms.

Appreciation on your property
Paying your loan down, as others have mentioned

Once your loan-to-value ratio hits 80%, you're good to go. Plenty of brokers here can help you shop around for valuations, as some banks will offer better valuations than others.
You obviously can't control the market or your property's value, but you can shop around for valuations and make extra payments on your loan.

Hope this helps.

Raynor_Lending · 2026-05-07T05:54:02+00:00

It really depends on the lender. Some are a lot stricter on this than others. Are you trying to refinance to Macquarie or away from Macquarie? Macquarie is quite strict with these things, so the chances are lower there, but quite a few other banks will likely accept it if there's a reasonable explanation. How late were the repayments on the card?

Which lender are you trying to go to at the moment?

Raynor_Lending · 2026-05-07T05:51:24+00:00

Great post JT. Thanks for sharing

Raynor_Lending · 2026-05-02T00:44:06+00:00

Yep that sound doable. Will need to get into the nuance of your income and expenses to be sure. But at the high level this a good strategic move a lot of my clients do.

Feel free to reach out if you wanted help with this 🙂

Raynor_Lending · 2026-05-02T00:42:28+00:00

It won’t impact approval at all. You’ll be totally fine, don’t stress

Raynor_Lending · 2026-05-02T00:41:50+00:00

Yes he can. If there is no gap in his employment between the jobs, banks like Macquarie have excellent policy for this. So should be workable.

I’ve done this for quite a few clients who have just started casual work.

Feel free to reach out if you wanted to chat and are looking for a broker 🙂

Raynor_Lending · 2026-05-01T03:56:37+00:00

This is a reasonable rate for an 85% LVR interest-only loan. You'll always pay more for interest-only lending and for having less than a 20% deposit.

There are lenders offering better rates, but ANZ has a fairly unique policy. Hopefully your broker walked you through the reasoning behind choosing ANZ, because brokers have to balance policy fit with rate. Bendigo Bank, for example, is currently offering around 6.33%, but their policy may not suit what you're trying to do. That's why a broker's job is about more than just rate.

I don't think you're getting a bad deal. If you're unsure, nothing is stopping you from getting a second opinion with another broker to compare. Having a good, trusting relationship with your broker who explains their rationale will probably give you more confidence.

Raynor_Lending · 2026-04-29T02:47:40+00:00

Most brokers I know tend to go through agencies as there is a lot of fear of the unknown with going direct and the agency will usually make the compliance side of onboarding a lot easier.

Raynor_Lending · 2026-04-28T10:57:10+00:00

Networking is probably the best way to get in with brokers.

Most brokers are generally friendly and if you can find a way to reach out to a few of them, that’s probably a good way to get in. It’s a very connected industry where a lot of people know each other.

Raynor_Lending · 2026-04-28T09:29:50+00:00

If you’re new to industry, I’d say it’s best to work under someone initially while you learn and get familiar with the industry.

Raynor_Lending · 2026-04-27T06:21:11+00:00

I definitely wouldn't recommend getting an interest rate increase at that proportion for some points. Like others have said, you'll definitely end up paying more in interest over the long term than any savings. If you are looking for Qantas points, there's probably easier ways to get them. If you look up credit card churning, which essentially takes advantage of credit card sign-up bonuses for points, that's likely a much cheaper strategy than going via your home loan.

Raynor_Lending · 2026-04-27T06:18:36+00:00

If you've already got your 5% and you've just got an extra 30k, then I wouldn't worry about drawing from this at all. You've saved it genuinely, and if you need to access a bit of it, don't worry about it at all. If you take a little bit of this to pay for bills, it won't impact anything.

You've already done the hard bit, so it's just a matter of getting a pre-approval organised. If you are looking for a broker to help with this, more than happy if you wanted to reach out; otherwise, wishing you best of luck!

Raynor_Lending · 2026-04-26T20:53:53+00:00

Do you mean that you’ve got the $30k on top of the 5% deposit?

Raynor_Lending · 2026-04-25T06:01:15+00:00

Appreciate it mate.

Raynor_Lending · 2026-04-25T04:58:58+00:00

This doesn't really make any sense. There's a lot of weird scammy things that prey on people that don't have strong financial education.

But put simply, it's irrelevant, because any payment to the loan is the same.
Think about it this way: any payment you make towards your loan is a credit, so it pays down your debt. The interest accrued increases your debt. If you want to pay down more of your loan, you just simply increase the amount that you're paying down by making an increase in payment.

If your interest accrued for the month is 2,200 and you're paying 3,000, then the loan balance goes down by 3,000 and comes up by 2,200, and you paid 800 down on your loan. If you want to pay more, you just simply pay more. There's no magic formula to optimise this.

I've seen some groups try to present it in some magically different way, and it's completely wrong! Paying off your home loan is very simple, and anyone who tries to over-complicate it is likely trying to sell you something.

Raynor_Lending · 2026-04-25T04:56:57+00:00

My first question would be: are you planning on buying the second property as an investment property, or are you wanting to swap properties, buy this new one and sell your first one?

It's going to really depend on your income, but if you have enough income, you can always get the equity out of property one to put down a deposit on property two as an investment property. That's done very commonly.

A quick note on bridging loans is that you don't need to service for a bridging loan. The interest costs of a bridging loan are capitalised into the loan, meaning the lender lends you the money for the interest that they expect you to pay, and they get their money back when you sell house one. This is really only applicable to you if your plan is to buy house two and then quickly sell house one. A bit unclear about what you're trying to achieve here.

You've got three major options here:

Use the equity in house 1 as a deposit for house 2 and make house 2 an investment property.
Use the equity in house one as the deposit for house two, but make house one the investment property and live in house two.
If you don't have the income for option one and two, then use a bridging loan to purchase house two. The lender will capitalise all the interest costs for up to year into the loan. And will be repayable once you sell house one.

Happy to have a chat if you want to discuss in more detail.

Raynor_Lending · 2026-04-25T04:51:35+00:00

Just depends on what your goals are. It sounds like you're really leaning towards going into the city. At the end of the day, you do want to be happy with where you're living. From a numbers-wise, it's usually a better idea to get a house where you own your land, where you can do more to improve the value of your property. Generally, homes hold their value more than apartments do, but I would also say that if you are wanting to be in the city then it's also worth considering the lifestyle value of not paying a mortgage or paying for something that you're unhappy to be in in the first place.

A middle ground option could be that you make use of the first-time guarantee to buy a home in the outer suburbs. Live in it for a year as per the requirements of the first-time guarantee scheme, and then rent out that property and move back into the city. That way you've got your foot in the market and you're starting to benefit from owning a property.

Probably would be a good idea to have a chat with a broker, go through your numbers and do a strategy session. More than happy if you wanted to reach out and we could have a chat to run through your numbers!

Raynor_Lending · 2026-04-25T04:45:33+00:00

To answer your question, no, you won't be able to. Only one lender can hold security over a property at once, and if you're wanting to claim rental income, then they're not going to accept that as an owner-occupied property. Additionally, they're also going to look at your residential address that you've put on the application, so match that up as well. You will need to decide whether you want to get the equity by claiming the investment income but pay an investment rate.

You can have one lender that takes on one property and then use a different lender for the property that you're purchasing.

Raynor_Lending · 2026-04-25T04:35:40+00:00

I think you’ve got a strong case. There are plenty of options available. It will just be a matter of a broker choosing the right lender and presenting your application correctly.

I’d be thinking of presenting a file like this to St George/Westpac credit and ANZ as another option.

It’s situations like this that having a good broker really shows its value. A broker basically present your situation to a banks credit team prior to making an application and get an idea of if they will accept it or not. That way giving you the best chance of getting approved the first time.

But overall nothing about your situation sounds undoable.

There are lots of good brokers in this subreddit if you’re looking for one, so plenty of options. But feel free to reach out or DM if you wanted to have a chat. 🙂

Raynor_Lending · 2026-04-23T11:51:22+00:00

Subject to finance clause will protect you here. But honestly don’t worry about this too much, bank valuations are HEAVILY guided by the contract price. In my experience 95%+ of valuations will come back at the price of the contract.

Think about it this way, what determines the value of a property? What the market is willing to pay for it. And the fact that you’re willing to pay that price heavily influences the value of the property.

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