Most people assume borrowing power comes down to one thing: income.
The common belief is simple. Earn more money and you'll be able to borrow more. While income certainly plays an important role, it's only one piece of a much larger puzzle.
In reality, I see people on similar incomes receive very different lending outcomes all the time. They might be looking at comparable properties and have similar employment situations, yet one person can borrow significantly more than the other.
So what causes the difference?
Borrowing power isn't a one-size-fits-all number. There are a range of factors working behind the scenes that influence how lenders assess your application, and this is where the gap between borrowers often starts to appear.
One of the biggest factors is your expenses. Lenders don't just focus on what you earn. They're also interested in what you have left over after your regular commitments have been paid.
Things like personal loans, credit card limits, subscriptions, childcare costs, dependants and general lifestyle spending all contribute to the picture.
As a result, two people earning exactly the same salary can end up with very different levels of surplus income, which can have a direct impact on how much they are able to borrow.
Another important factor is that not all lenders assess borrowers in the same way. Every bank has its own servicing calculator, lending policies and appetite for different types of applications.
One lender may take a conservative approach and limit what you can borrow, while another may view the same situation more favourably.
This is one of the reasons why relying solely on your existing bank can sometimes be restrictive. What looks like a hard limit with one lender may not be the same elsewhere.
The structure of your application can also play a significant role. It's not always just about the numbers themselves. It's about how those numbers are presented and how your overall financial position is positioned.
The way income is evidenced, how debts are structured and how your application is prepared can all influence the lender's assessment.
This is where working with a Mortgage Adviser can add real value. It's not simply about submitting an application. It's about understanding which lender is the best fit and presenting your situation in the strongest possible way.
In some cases, relatively small adjustments can lead to a noticeably different outcome.
Timing can also have an impact. Interest rates, lender policies and servicing test rates change over time, which means borrowing power can shift even when your personal circumstances remain largely the same.
Two people with very similar financial positions applying months apart may find themselves receiving very different results.
Borrowing power isn't just a number based on income. It's influenced by a range of factors that work together to create your overall lending position.
That's why getting a second opinion can often be worthwhile. What one lender says isn't necessarily the full picture, and exploring your options may reveal opportunities you didn't realise were available.
If you're unsure where you stand, or you've received a lending decision that doesn't quite seem right, it may be worth taking another look.
Feel free to reach out if you'd like to discuss your situation. We're always happy to help.