How to calculate your mortgage borrowing power
To use our borrowing power calculator to calculate your mortgage borrowing power*, you'll need a couple of details. If you don't have them (or don't know them), that's okay — just use a rough estimate. You'll need your:
- Household income
- Total dependents
- Desired home loan
- Typical expenses
Got all four handy? Or an estimate of all four? Great! It's time to get started. To calculate your mortgage borrowing power click on the link below and fill in your details. You'll get your estimate instantly.
*Your mortgage borrowing power is the amount of money you will be able to borrow for a home loan.
3 simple ways to increase mortgage borrowing power
Unhappy with the results of our borrowing power calculator?
It is possible to increase your mortgage borrowing power. And no, you don't have to 'earn more money' or 'inherit a fortune' to make it happen. Here are 3 simple ways to increase your borrowing power right now.
1. Find a co-borrower
A co-borrower is someone who will sign onto your home loan with you. Typically they are a spouse or partner, however they can be anyone who is willing to take out the home loan with you.
They can be a family member, such as a parent, uncle or aunt, brother or sister, or they can be a close friend — this is becoming increasingly popular as young people in the inner city look to buy their first home.
A co-borrower adds a second income to your application, which will naturally raise your borrowing power.
Just remember, your co-borrower is co-signing the home loan with you. They will have the same rights and responsibilities as you regarding repayments and ownership. Choose someone you trust.
2. Reduce existing debt
Nothing will bring down your mortgage borrowing power like existing debts. So, before you start applying for home loans, focus on reducing your existing debt. Including debt from:
- Car loans
- Personal loans
- Credit cards
- Student loans
Depending on your situation, you may be able to sell assets to repay the debt. For example, you could sell your car in order to close off your car loan. If you retain any funds from the sale you can put them toward your deposit too.
Alternatively, you could try consolidating your debt.
3. Find a more suitable home loan
If you've already started shopping around for a home loan, you'll know that home loans come in a range of different shapes and sizes. Some have lower rates, while others have more flexible features or lengthier terms.
For the purpose of increasing your borrowing power, you need to focus on:
- Finding a lower interest rate
- Securing a longer loan term
A lower interest rate will reduce your monthly repayments and will help you to stretch your income further, so will choosing a lengthier loan term — for example, a 30 year loan term instead of 25 year one.
Remember, there are a range of loans and lenders out there. You don't have to settle for what the big banks say, you may be able to get a better deal by looking elsewhere.
Other ways to increase your borrowing power
While increasing your income or inheriting a packet, isn't the only way to enhance your mortgage borrowing power, it definitely helps.
Here are some tips for increasing your income, as well as how your family can help you to get a home loan without relying on a large inheritance.
1. Advice for increasing your income
There are a range of ways to increase your income, from taking on extra shifts if you're a casual employee to having that difficult conversation with your boss about a raise.
The Internet has made it easier than ever to make additional income too. From selling arts and crafts on Etsy to becoming a taxi driver via Uber, there are a lot of opportunities for making a second income online.
Are you good with children? Try babysitting for extra cash. Do you know a second language? People will pay good money for language tutoring. Every little bit helps.
2. How your family can help (without an inheritance)
There are a number of ways that your family can help you to secure a home loan without having to rely on an inheritance.
One way to increase your capital and borrowing power is by having a relative 'gift' you a portion of their home's equity. For example, if a parent has $200k equity in their home, they could take $10k worth of that equity and put it toward your deposit, thereby significantly increasing your mortgage borrowing power.
Another option is for a family member to nominate themselves as a 'guarantor'. A guarantor puts up their own home as collateral against your home loan. This can allow you to access extra funds. However, this should be undertaken with caution as your guarantor will be liable should you default on your loan, .
"Unhappy with the results of our borrowing power calculator? There are options."
You've tried the borrowing power calculator? Now apply!
You've tried the borrowing power calculator, now take the next step. Apply with a Rapid Finance home loan specialist today to find out how we could help you to secure a suitable home loan.
We could compare a range of loan products from a variety of lenders to find a home loan that's right for you, your situation and your budget. Even if you're a first time buyer, we may be able to assist.