Maximise Your Property Search with Our Borrowing Power Calculator

Before starting your property search, it’s important to understand how much you can borrow. Your Borrowing Power is the amount a lender is willing to loan based on your financial situation. Our Borrowing Power Calculator can help you estimate this, providing a clearer idea of your budget as you explore property options.

What is Borrowing Power?

Borrowing power refers to the maximum loan amount that a lender may offer you for purchasing a property. It’s determined by various financial factors, including:

• Your income
• Existing debts
• Credit score
• Living expenses
• Number of dependents

This assessment ensures that your loan repayments are manageable, helping you avoid financial strain.

Why is Knowing Your Borrowing Power Important?

Understanding your borrowing power is essential for several reasons:

• Budget Setting: It allows you to focus on properties that are within your financial range, saving you time and effort.
• Financial Planning: Knowing your potential loan repayments helps you manage your budget and ensure your finances can accommodate a new loan.
• Negotiation Power: Entering negotiations with confidence in your borrowing capacity can strengthen your position.
• Avoid Over-Commitment: Understanding your limits helps you avoid borrowing more than you can comfortably repay.

While knowing your borrowing power is important, it’s equally crucial not to stretch yourself too thin. Always maintain a financial buffer for unexpected expenses.

How Our Borrowing Power Calculator Works

Our Borrowing Power Calculator takes several key financial details into account:

• Your income
• Regular expenses
• Interest rate
• Loan term

Simply enter this information, and the calculator will estimate the amount you may be able to borrow.

Understanding the Results

The calculator provides an estimate of your maximum borrowing limit, which helps you set a realistic price range when searching for a home. Keep in mind that this is only an estimate, not an official loan offer.

Factors That Influence Your Borrowing Power

Several factors determine your borrowing power, including:

• Income & Expenses: Lenders assess your income in relation to your living expenses. If your expenses are high, it may lower your borrowing capacity even with a substantial income.
• Credit Score: A good credit score signals reliability and can boost your borrowing power. A low score, however, may reduce the amount lenders are willing to offer.
• Existing Loans: The more debt you already have, the less lenders may be willing to lend, as it reduces your capacity to take on new debt.

Tips to Increase Your Borrowing Power

Want to improve your borrowing power? Here are some strategies that may help:

1. Improve Your Credit Score: Paying off debt on time, reducing your credit usage, and avoiding frequent credit applications can boost your credit score.
2. Reduce Debt: Lowering existing debts (credit cards, personal loans) can free up your borrowing capacity.
3. Increase Your Income: A higher income can raise your borrowing limit, as it signals to lenders that you have more disposable income for loan repayments.
4. Cut Unnecessary Expenses: Reducing regular, non-essential spending (like dining out or subscriptions) can increase your disposable income.
5. Regular Savings: A consistent savings habit shows lenders that you can manage your finances responsibly, which may improve your borrowing prospects.
6. Consider a Longer Loan Term: Extending your loan term can reduce monthly repayments, potentially increasing the amount you can borrow. However, this also means paying more interest over time.

Using Borrowing Power to Guide Your Property Search

With a clear understanding of your borrowing power, you can efficiently search for properties within your price range. This prevents you from wasting time on homes that are out of reach and keeps your search focused on viable options.