How much can I borrow?
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Frequently asked questions
While homebuyers may tend to think in terms of how much savings or equity they have and ‘property price’, banks tend to talk about LVR and their assessment of the value of the property. So when working out your LVR, remember to base it on the bank’s valuation (if you have one) rather than the price you’re prepared to pay. Here's how a difference in your property’s price and value can affect the deposit you need:
- $100k deposit ÷ $500k purchase price = 0.2 (x100 for a percentage) = 20% price deposit
- $100k deposit ÷ $480k valuation = 0.21 (x100 for a percentage) = 21% valuation deposit
- $400,000 loan ÷ $480,000 valuation = 0.83 x 100 (for a percentage) = 83% LVR
If you already own a property, you may want to use any equity you’ve built to help buy your next one. Equity is the difference between your property’s current market value, and what you still owe on your home loan. You can estimate your usable equity with this equity calculator.
It’s a term lenders used to describe how much you might be able to borrow, based on your financial situation. Things that affect your borrowing power include how much you earn, how much you owe or repay on other debts like credit cards, how much you’ve saved as a deposit and whether you have a guarantor.
This Affordability Calculator is based on what you’d be happy to repay, while our Maximum Loan Calculator estimates the upper limit of your loan – your borrowing power.
You can calculate your borrowing power here. It depends mainly on how much you earn (income) and what you need to spend your money on (expenses). We consider things like school fees, utility bills, rent and debt repayments - as well as your entertainment and grocery spend - to ensure you’re able to repay the loan amount over time, given your finances and lifestyle.
There are some things you can do to help increase your borrowing power:
- Reduce your credit limit – close any unused credit cards
- Pay down your debts, like personal loans
- Lower your spending
- Keep a good credit score
- Split your liabilities with a partner if you’re borrowing on your own
- Start or keep saving to demonstrate a good savings history.
You might also be able to increase the amount you can borrow by asking a family member to guarantee all or part of your loan. At Westpac, this is called a Family Security Guarantee and it could help you get into the market quicker.
Your limit on other debts, like credit cards and personal loans, might affect your borrowing power. Even if you’ve paid your credit card off completely, your home lender will still look at these limits as potential debt, which affects how much they’ll be willing to lend you.
Your history of repayments on other debts can also come into play. So it’s worth getting a copy of your credit report to check your credit history before applying. If it’s not as strong as it could be, focus on paying down personal loans and credit cards or closing loan and credit accounts that you’re not using.
Employment status also has an influence, as it might be more complex to demonstrate your income if you’re self-employed or own a business.
Joint home loan applications are more complex for a lender to assess. On one hand, you and the person or people you’re applying with may have a great deal more borrowing power, owing to your collective assets and deposit. On the other hand, you may have a greater collective total of debt and financial history for your lender to consider, and this might limit what you can borrow together. Estimate your Maximum Loan amount here.
We love them dearly, but no parent can deny that children cost money to raise and support. As with home loans, the responsibility of parenting lasts decades – and so do the associated costs. This is partly why the number of dependents you support factors into your borrowing power – your family is a major and important ongoing part of your life that costs money, so it ought to play into what you can afford to repay in the long term.
The answer has less to do with your salary and more to do with the broader context of your financial situation.
Your salary is an important element in assessing how much you can borrow, but so are your expenses, the limits on your credit accounts and your credit history. Each of these things presents us with information that helps us understand whether you could afford to repay the loan.
How much deposit you’ve saved is also important – typically, if you don’t have a deposit of 20% of the property’s bank valuation, you may need to pay lenders mortgage insurance.
This could include bonuses or invoices paid for jobs other than your main one. It could also include interest earned on investments, like other properties or stocks you own.
This can include everything involved in maintaining your investment property. The costs could include strata payments, maintenance expenses, utilities and council rates.
Simply check your account statements or online banking dashboard. Each credit card and account with an overdraft should display a credit limit alongside the amount you’ve already borrowed from that credit account. If your bank doesn’t display overdraft limits online or in statements, give them a call and ask.
Once you have the figures, add them up. An accurate summary of all your credit and overdraft accounts will give you a more accurate calculation here and help us process your application faster when you apply.
Things you should know
Credit Criteria, fees and charges apply. Terms and conditions available on request. Based on Westpac's credit criteria, residential lending is not available for Non-Australian Resident borrowers.
This calculation is not an offer of credit but an estimate only of what you may be able to borrow based on the information provided and does not include all applicable fees (except for monthly fees). Your borrowing power amount may be different when you complete a full application and we capture all details relevant to our lending criteria. Our lending criteria and basis upon which we assess what you can afford may change at any time without notice. Before acting on this calculation you should seek professional advice.
All interest rates referred to in the calculators are current, as indicated on westpac.com.au. The interest rates represented on this page may include promotional discounts and are subject to change. When assessing ability to service a loan, Westpac may use an interest rate that is higher than the current interest rate for the loan requested.
The output of each calculator is subject to the assumptions provided under each calculator and are subject to change. The calculator does not take into account any future refinancing options which may be available. The calculator does not take into account any product features, grants or any applicable bank fees. For details on fees and charges, please go to westpac.com.au
#Comparison rate: The comparison rate is based on a loan of $150,000 over the term of 25 years. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
Special offers are only available on new Flexi First Option Home and Investment Loans. Discounts do not apply to internal refinances or switches within the Westpac Group, which includes refinances from Westpac, St.George, Bank of Melbourne, BankSA and RAMS. Not available to company and trust account holders. Offer may be varied or withdrawn at any time.
*Offer commences 18/09/2020. Includes a 1.64% p.a. discount off our Flexi First Option Home Loan Variable Rate with Principal & Interest repayments for two years from loan settlement date, at the end of the period it will revert to a 1.14% p.a. discount for the remainder of the life of the loan. Interest rates are subject to change.
**Offer commences 5/06/2020. Includes a 0.53% p.a. discount off our Flexi First Option Home Loan Variable Rate with Interest Only repayments for the life of loan. Interest rates are subject to change.
***Offer commences 18/09/2020. Includes a 1.89% p.a. discount off our Flexi First Option Investment Property Loan Variable Rate with Principal & Interest repayments for two years from loan settlement date, at the end of the period it will revert to a 1.29% p.a. discount for the remainder of the life of the loan. Interest rates are subject to change.
****Offer commences 5/06/2020. Includes a 1.35% p.a. discount off our Flexi First Option Investment Property Loan Variable Rate with Interest Only repayments for the life of loan. Interest rates are subject to change.
+LVR stands for the initial loan to value ratio at loan approval. LVR is the amount of your loan compared to the Bank’s valuation of your property offered to secure your loan expressed as a percentage. For example, a loan of $400,000 to buy a property worth $500,000 results in a loan to value ratio of 80%. The interest rates below are for new loans. Home loan rates are set based on the initial LVR and don’t change because of changes to the LVR during the life of the loan.
Weekly and fortnightly repayment calculations – if your monthly repayments are $1000, fortnightly repayments are calculated by dividing $1000 by 2 ($1000 ÷ 2 = $500) and weekly repayments are calculated by dividing $1000 by 4 ($1000 ÷ 4 = $250)
The output or result of these calculators:
- is subject to the assumptions which are subject to change;
- is prepared without knowing your personal financial circumstances. Before you act on the output of the calculators, please consider if it’s right for you. If you need more information, please call 1300 786 029. We recommend that you consult your financial adviser before taking out a loan;
- does not represent either a quote or pre-qualification for a loan;
- may not be taken into account if you apply for a loan with us as we will make our own calculations. When assessing ability to service a loan, Westpac may use an interest rate that is higher than the current interest rate for the loan requested.
The interest rates used in the calculator:
- are current, as indicated on our home loan interest rate pages;
- are Westpac's standard interest rates and include any package or promotional discounts; and
- are subject to change.