Understand your borrowing capacity.
And what affects it.
Borrowing capacity isn't just about income. Expenses, debts, assets, employment history, credit position and lending policy all play a role. Bharat Finance helps clients see the wider picture and the factors that may influence it.
The full mechanics.
Lenders assess borrowing capacity by looking at income, expenses, existing debts and your financial position.
Gross income
Salary, investment income, rental income and business profit. Some forms of income require longer history or documentation.
Living expenses
Rent, utilities, food, transport. Lenders estimate these — some at $300/week, others much higher. This is often the most conservative part.
Existing debts
Car loans, credit cards, personal loans all reduce serviceability. Even small debts can have big impact.
Interest rate buffer
Lenders approve loans at a serviceability buffer (e.g., 3% above current rate) to account for rate rises.
Loan-to-value ratio (LVR)
The size of your deposit matters. Larger deposits mean lower LVR, which can access better rates and lower insurance.
Lender policy
Different lenders have different rules on income types, serviceability buffers, maximum LVR and debt-to-income ratios.
Why can't I borrow what I expected?
Several scenarios explain the gap between what people think they can borrow and what they can actually get approved for.
I have equity. Why can't I borrow more?
Equity alone isn't enough — serviceability is the constraint. If you don't have enough income relative to expenses, lenders won't lend. They'll approve a smaller loan, use a lower LVR, or decline altogether.
Why do living expenses feel too high?
Lenders use conservative benchmarks. They assume your lifestyle and aren't easily persuaded by lower personal estimates. If they estimate $400/week and you say $250, they use $400.
How much does a credit card impact me?
A $10k credit card with $2k balance might reduce your serviceability by $200+ per month even if you never use it. Unused limits still count.
Can I get a second opinion?
Yes. Different lenders have different serviceability models, living expense benchmarks and attitude to complex income. A second assessment often reveals a path forward.
Understand your likely borrowing capacity.
Bharat Finance can compare serviceability scenarios to explain what may affect a client's position across different lender policies.