1. What is CommBank Borrowing Capacity Calculator?

The Commonwealth Bank Borrowing Capacity Calculator estimates how much you can borrow for a home loan based on your income, with a 2.5-3% buffer rate to account for potential interest rate changes and ensure affordability.

2. How Does the Calculator Work?

The calculator uses the CommBank borrowing capacity formula:

Where:

• \( Monthly\ Income \) — Your gross monthly income
• \( Buffer\ Rate \) — 2.5% to 3% safety buffer
• \( Monthly\ Repayment\ Factor \) — Calculated based on interest rate and loan term

Explanation: The buffer rate ensures you can still afford repayments if interest rates rise, providing a conservative borrowing estimate.

3. Importance of Borrowing Capacity Calculation

Details: Accurate borrowing capacity assessment is crucial for responsible lending, ensuring you don't overextend financially and can comfortably manage mortgage repayments.

4. Using the Calculator

Tips: Enter your monthly income, select buffer rate (2.5-3%), current interest rate, and desired loan term. All values must be valid positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why does CommBank use a 2.5-3% buffer?
A: The buffer ensures borrowers can still afford repayments if interest rates increase, providing a safety margin for financial stability.

Q2: What factors affect borrowing capacity?
A: Income level, interest rates, loan term, existing debts, living expenses, and credit history all impact how much you can borrow.

Q3: Is this calculator specific to CommBank?
A: Yes, this uses CommBank's specific affordability assessment methodology with their standard buffer rates.

Q4: How often should I reassess my borrowing capacity?
A: Regularly, especially when interest rates change, your income changes, or before considering additional borrowing.

Q5: Does this include other financial commitments?
A: This calculator focuses on income-based capacity. Actual assessments may include other debts and living expenses.