1. What is Home Loan Borrowing Capacity?

Home Loan Borrowing Capacity represents the maximum amount you can borrow for a home loan based on your serviceable income and the loan term. It helps determine your purchasing power in the housing market.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• Serviceable Amount — Your monthly affordable repayment amount
• Loan Term — Duration of the loan in months

Explanation: This calculation provides an estimate of your total borrowing capacity based on your monthly repayment ability over the loan period.

3. Importance of Borrowing Capacity Calculation

Details: Understanding your borrowing capacity is essential for home buyers to determine their budget, assess affordability, and make informed decisions when shopping for properties.

4. Using the Calculator

Tips: Enter your maximum comfortable monthly repayment amount and the desired loan term in months. Ensure both values are positive numbers for accurate results.

5. Frequently Asked Questions (FAQ)

Q1: What factors affect serviceable amount?
A: Your income, expenses, existing debts, interest rates, and lender's assessment criteria all influence your serviceable amount.

Q2: How does loan term affect borrowing capacity?
A: Longer loan terms typically increase borrowing capacity as monthly payments are spread over more months, but result in higher total interest paid.

Q3: Is this calculation accurate for all lenders?
A: Different lenders may use slightly different formulas and assessment criteria. This provides a general estimate.

Q4: Should I borrow to my maximum capacity?
A: It's generally recommended to borrow conservatively to allow for interest rate changes and unexpected expenses.

Q5: How often should I reassess my borrowing capacity?
A: Reassess whenever your financial situation changes significantly, or when interest rates fluctuate substantially.