Borrowing Capacity Calculator Aussie

Aussie Home Loans Borrowing Power Formula:

\[ Serviceable\ Income = Gross\ Income - (Tax + Existing\ Commitments + New\ Commitments + Living\ Expenses + Buffer) \] \[ Max\ Loan = Serviceable\ Income / Servicing\ Rate \]

Gross Income (AUD/year):

AUD/year

Tax (AUD):

AUD

Existing Commitments (AUD):

AUD

New Commitments (AUD):

AUD

Living Expenses (AUD):

AUD

Buffer (AUD):

AUD

Servicing Rate (decimal):

decimal

Serviceable Income (AUD/month):

Max Loan (AUD):

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1. What is the Aussie Home Loans Borrowing Power Calculator?

The Aussie Home Loans Borrowing Power Calculator estimates your maximum borrowing capacity based on your income, expenses, and financial commitments. It helps determine how much you can potentially borrow for a home loan.

2. How Does the Calculator Work?

The calculator uses the following formulas:

\[ Serviceable\ Income = Gross\ Income - (Tax + Existing\ Commitments + New\ Commitments + Living\ Expenses + Buffer) \] \[ Max\ Loan = Serviceable\ Income / Servicing\ Rate \]

Where:

\( Gross\ Income \) — Your total annual income before tax
\( Tax \) — Estimated annual tax amount
\( Existing\ Commitments \) — Current loan repayments and financial obligations
\( New\ Commitments \) — Proposed new financial commitments
\( Living\ Expenses \) — Your estimated annual living costs
\( Buffer \) — Additional safety margin for unexpected expenses
\( Servicing\ Rate \) — The lender's assessment rate (typically 0.07 or 7%)

Explanation: The calculation determines your disposable income after all expenses, then calculates how much you can borrow based on the lender's servicing criteria.

3. Importance of Borrowing Capacity Calculation

Details: Accurate borrowing capacity assessment is crucial for home loan applications, helping you understand your budget limitations and avoiding over-commitment financially.

4. Using the Calculator

Tips: Enter all amounts in Australian dollars. Be realistic with your expense estimates. The servicing rate is typically around 0.07 (7%) but may vary by lender.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical servicing rate?
A: Most Australian lenders use a servicing rate between 0.07-0.08 (7-8%) as a buffer against interest rate rises.

Q2: Should I include all my expenses?
A: Yes, for an accurate assessment, include all regular expenses including utilities, groceries, insurance, and entertainment.

Q3: How often should I recalculate my borrowing capacity?
A: Whenever your financial situation changes significantly - after a pay raise, new financial commitments, or major life changes.

Q4: Are there other factors that affect borrowing capacity?
A: Yes, lenders also consider credit history, employment stability, existing assets, and the type of property you're purchasing.

Q5: Is this calculation definitive for loan approval?
A: This provides an estimate only. Final approval depends on the lender's full assessment and credit policies.