Your borrowing capacity represents how much you can borrow from the bank. Borrowing the right amount could help you buy your first home, ensure renovation success, or help comfortably support a growing family.

But what is the right amount for your unique situation? To get you started on the right foot, Jesse Blume, a Suncorp Bank Lending Manager, provides some borrowing capacity tips.

Getting started: researching houses and loan-related costs

Knowing how much to borrow starts with understanding what you need in a property.

After giving some thought to what kind of house or apartment best suits you, you might want to research prices of similar properties in locations that appeal to you. After factoring in your deposit, you should have a ballpark idea of how much you’ll need to borrow.

To get a clearer idea of what the final borrowing amount might look like, you’ll need to learn what costs apply to your home loan. Some common costs include:

• Lenders Mortgage Insurance (if you have less than 20% deposit)
• stamp duty
• loan-related fees
• legal fees
• moving services.

Fees and costs can differ between properties, where you live (such as state-related government fees) and your circumstances. If you’re not sure what applies to you, your lender will be more than happy to provide guidance on the loan fees and costs.

Factor in your current and future financial commitments

After getting an idea of how much your property could cost, consider whether bundling other finances into your home loan might be beneficial.

“When developing a financial strategy, it’s important to consider not just the current transaction, but potential property and lifestyle transactions down the road,” Jesse says.

By considering your other finances now, you may save time and money in the future. For example, depending on your personal circumstances and financial situation, consolidating your debt with a single loan could minimise fees, potentially offer lower interest rates, and provide a simpler repayment structure.

Consider how repayments might affect you in the future

When working out your home loan borrowing power, consider how changes in your circumstances could impact your ability to meet repayments.

“Factoring life stages in is crucial,” Jesse says. “Consider your borrowing capacity in relation to different life stages can help prepare you for periods where your income and expenses will change.

“For example, a family with school costs has very different cash flow needs than a single applicant.”

Your financial position could be affected if you’re:

• planning to start or grow your family
• planning extensive time off work
• preparing for a change in income
• considering a change in careers or retiring.

Lean on your lender to get a better sense of your home loan borrowing capacity

When working out your home loan borrowing power, a discussion with your lender can provide a clearer picture of how much you can afford to borrow and the impact life changes might have on your finances.

“Big financial decisions like this can make a huge difference for a client – for better or worse – so we firmly believe it’s our responsibility to guide you.

“Understanding your circumstances allows you to talk over options with your lender for that particular life stage, such as having children in day-care versus having children in high school.”

For Jesse, getting an understanding of every aspect of your loan from the get-go leads to better outcomes for everyone.

“Helping make you aware of the benefits and pitfalls based on your personal circumstances is what separates good from great service.”

Learn more about borrowing from the experts

When it comes to working out how much to borrow, expert advice can go a long way.

If you’d like to learn more about what borrowing amount could be right for you, Suncorp Bank lending experts just like Jesse are always willing to lend a helping hand, and all consultations are 100% obligation-free.

Talk to a home loan expert

Published 12 January 2022