Know Your Borrowing Power: The Smart First Step Before Searching for Property
Don’t Waste Time—Get Clear on What You Can Actually Afford
Before you fall in love with a property or spend hours scrolling through listings, there’s one move that separates smart investors from the rest: knowing your borrowing power.
It’s not just about how much you earn—it’s about what the banks will lend you, what you can afford to repay, and how your current financial position stacks up.
What Is Borrowing Power?
Your borrowing power is the amount a lender is willing to let you borrow for a property purchase. It’s calculated based on a range of personal and financial factors. Understanding these upfront puts you in control and ensures you don’t waste time or set yourself up for disappointment.
Here’s what lenders look at:
Your income
Existing debts (credit cards, personal loans)
Living expenses
Deposit size
Credit score
Interest rates and loan terms
Even a high income doesn’t guarantee high borrowing power—your expenses, liabilities, and even the type of loan you choose can make a big difference.
Why It Matters Before You Search
Looking at properties before understanding what you can borrow is like shopping without a budget. It leads to wasted time, false hope, and missed opportunities. When you know your borrowing capacity early, you can move quickly, negotiate confidently, and target the right opportunities from the start.
Here’s why it’s so important:
You risk wasting time on properties you can’t get finance for.
You lose negotiating power if you’re not pre-approved.
You may miss better options that do suit your financial position.
A quick chat with a broker can make a huge difference.
What to Do First
Knowing your borrowing power isn’t complicated, but it does take a few smart steps. Think of this as your pre-investment checklist—the foundation of your strategy.
Start with these:
Speak with a mortgage broker to get pre-approval
Review your income and living expenses
Reduce existing debts where possible
Check your credit score and fix any errors
Build a solid deposit (and understand if you’ll pay LMI)
Use a loan calculator to model repayments
Keep a buffer for interest rate rises or emergencies
This Is the Foundation of Your Strategy
When you understand your borrowing power, you stop guessing and start investing strategically. It helps you filter out the wrong properties, make smarter finance decisions, and get your foot in the door faster—with less stress.
Here’s what you gain:
Clarity on what you can realistically afford
Confidence in your financial decisions
A stronger foundation to match your strategy to your long-term goals
Want help assessing your borrowing power and building a strategy around it? DM me 'APPROVED' and I’ll guide you through it.
