Get more MONEY for more home!

Example scenario: Jake and Jane

Jake and Jane want to find out their maximum borrowing capacity before they start looking for their new home, so they understand their budget.

Jake: Full time salary $80,000 pa

Jane: Part time salary $45,000 pa

1x credit card: $1,000 limit

We can test Jake and Jane’s borrowing capacity with 3 lenders, all assuming a loan to value ratio of 90% including LMI, to show how loan amounts vary by lender:

LENDER A

Max. loan amount: $550,000

• Hard on servicing, great products and very popular with younger borrowers as they are at the forefront of ‘ethical banking’

LENDER B

Max. loan amount: $835,000

• The most generous for servicing, and will offer the maximum loan amount available

LENDER C

Max. loan amount: $650,000

• Broadly considered to be ‘middle of the road’ in terms of servicing capacity

Lender A assigns a higher baseline living expense, a higher minimum repayment to the credit card, and for loans at 90% or above, want to see a minimum of $1,000 per month surplus income. They also have a debt-to-income ratio maximum of 5.

Lender B only wants to see a $1 surplus and has no debt-to-income ratio test.

Like Lender C, other lenders will scatter somewhere in the middle, but it highlights just how much bearing policy and individual lender appetite can be the difference between a “Yes” and “No”.

If you have any customers who indicate they are disappointed with what their bank has told them their maximum borrowing power is, or they tell you they ‘can’t afford’ a certain package, let’s see if we can find them a more generous proposition.