Frequently Asked Questions

What is borrowing power?

Your borrowing power refers to the amount of money you can afford to borrow from MyState for a home loan. This is determined primarily by your current financial situation which includes your income, your savings balance, your credit history and your financial commitments and spending habits. Financial commitments can include credit cards, personal and/or car loans, payment schedules and more.

We’ll calculate your borrowing power by taking your gross income amount and removing the cost of your income tax portion, existing debt commitments, home loan repayments (if applicable) and living expenses. This calculation will determine a surplus amount left over after all expenses are accounted for.

All financial institutions undertake a borrowing power assessment when you apply for finance. Using our borrowing power calculator can help you to anticipate whether you are likely to be approved for a new loan as well as highlight where you can improve your finances to make you a more eligible borrower.

How does the borrowing power calculator work?

Our online borrowing power calculator is designed to do all of the hard work for you. Input your income details (including any other regular income you generate from assets and investments) and any financial commitments that you have. If there is not a chosen field for the type of regular expense or payment, then include it in the ‘Other Payments’ field.

You can choose to use the pre-loaded average Australian annual expenses amount, or you can manually input your total expenses. Similarly, you can also adjust any other spending assumptions made including the interest rate buffer and the average cost of dependants.

How does income affect your borrowing power?

The amount of income that you generate must be higher than your financial commitments and expenses to give you any borrowing power at all. Your eligibility as a borrower will be determined by how much money is left over from your income once all of your financial commitments have been met.

Income includes any and all sources of money including regular interest payments on savings balances, investment income, rental income, salary, etc.

Can your expenses affect your borrowing power?

Absolutely. The more you spend, the more your borrowing power reduces. Living and entertainment expenses are unavoidable but there are ways that you can monitor, manage and reduce your spending habits to help you reach your savings and borrowing power goals sooner. Take advantage of our insightful tools and spending analysis included as standard with a transaction or savings account with MyState when you use the MyState Bank App.

How to increase borrowing power?

To increase your borrowing power, consider ways of increasing your income amount and/or reducing your expenditure. You can do this in a number of ways, including reducing your regular spending, paying out any existing debt or finance, and by jointly applying for a loan with another person such as your spouse or partner. The second borrower’s income and financial commitments will also affect your joint borrowing power. You can use our online borrowing power calculator to see how an additional person could affect how much you can comfortably borrow.

It’s also a good idea to regularly check your credit file. You can do this online and for free. Maintaining a strong credit history helps demonstrate to lenders that you are a low credit risk and an attractive borrower.

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