How Much Can I Borrow? A South Coast Buyer's Guide
We get asked this question more than almost any other.
“How much can I borrow?” It sounds like a simple question, but the answer depends on more than most people realise. Understanding what lenders actually look at can make a real difference to your outcome.
Whether you're a first home buyer in Nowra, a family upgrading to something bigger in Berry, or an investor eyeing your next property on the Illawarra coast, your borrowing capacity is the starting point for everything.
It's Not Just About Your Income
Most people assume borrowing capacity is a simple income multiple. Put your salary in, get a number out. But lenders look at a much wider picture:
• Your gross income, including salary, wages, rental income, business income and government payments
• Your existing debts, such as personal loans, car finance and credit cards. Even unused limits count
• Your living expenses. Lenders use a benchmark called the Household Expenditure Measure (HEM) to estimate your spending, but they will also assess your actual bank statements
• Your dependants. Each child or financial dependent reduces your assessed borrowing capacity
• The type of loan. Your interest rate, loan term and repayment type all factor into serviceability calculations
It's a more detailed calculation than most people expect, and the outcome can vary significantly between lenders.
Why Lenders Reach Different Numbers
Here's something that surprises a lot of South Coast buyers. Two lenders looking at exactly the same application can come back with borrowing capacity figures that differ by tens of thousands of dollars, sometimes more.
Why? Each lender applies their own assessment rate, uses different methods to calculate living expenses, and has different policies around income types and debt obligations. Lender A might shade rental income at 80%. Lender B might use 100%. Lender A might assess your credit card limit at 3% per month. Lender B might use 3.8%.
These differences add up. It's exactly why working with a broker, who can compare how different lenders will view your specific situation, often leads to a much better outcome than walking into your local branch.
What Can You Do to Improve Your Borrowing Capacity?
There are a few practical steps that can move the dial before you apply:
• Reduce or close unused credit cards and personal loans. Even a $10,000 credit card limit you never use can reduce what you can borrow
• Pay down existing debt where possible, particularly high interest consumer debt
• Consolidate multiple smaller debts if appropriate. This is worth discussing with a broker, as there are nuances here
• Check your payslips and bank statements for consistency. Irregular deposits and unexplained expenses can slow things down
• If you're self-employed, make sure your tax returns are up to date. Most lenders will want two years of financials
Not all of these steps will be relevant to your situation, and some may not move the needle as much as you'd hope. A good broker will tell you what's likely to make a difference, and what's not worth stressing about.
A Real Example from the South Coast
A couple from the Shoalhaven came to us thinking they could borrow around $550,000 based on a rough online calculator. When we looked at their full picture, both incomes, a small car loan, and a credit card they rarely used, we found their actual borrowing capacity sat closer to $620,000 with the right lender. Closing one credit card made the difference.
That's what happens when you have a proper conversation about your circumstances, rather than relying on a generic tool.
So, How Much Can You Borrow?
We'd need to know a little more about your situation before we can give you a number. That's not a brush off, it's just what a proper borrowing capacity assessment looks like.
We can usually get a clear picture in one conversation. No obligation, no paperwork to start. Just a clear number, and a plan for what comes next.
It starts with a coffee.
Reach out to the Shorebreak Finance team in Berry and let's find your number.
