Maximise Your Borrowing Power on an $80,000 Salary in Australia

Understanding Borrowing Power on an $80,000 Salary

Borrowing power, also known as borrowing capacity, is the amount of money a lender is willing to loan you based on your financial situation. Lenders consider various factors, including your income, expenses, credit history, and existing debts. On an $80,000 salary, your borrowing power can vary significantly depending on these factors.

Key Factors Influencing Borrowing Power

Income and Employment Stability

Lenders assess your income to determine your ability to repay a loan. An $80,000 salary is a strong foundation, but lenders also value employment stability. Consistent, long-term employment in a stable industry can enhance your borrowing power.

Existing Debts and Financial Commitments

Outstanding debts, such as credit card balances or personal loans, will reduce your borrowing capacity. Lenders calculate your debt-to-income ratio (DTI) to assess risk, typically preferring a DTI of less than 30%.

Living Expenses

Your day-to-day living expenses, including rent, groceries, and utilities, are also considered. Lowering these expenses can increase your borrowing power, as it suggests you have more disposable income available for mortgage repayments.

Credit Score

A good credit score indicates responsible financial behaviour, making you a more attractive borrower. Aim for a credit score above 700 to improve your chances of securing a higher loan amount.

Practical Tips to Maximise Borrowing Power

1. Reduce Existing Debts: Pay down any outstanding debts to improve your DTI and free up more income for mortgage repayments.

2. Improve Your Credit Score: Check your credit report for errors and ensure all bills are paid on time. Consider paying off small debts to boost your score.

3. Minimise Living Expenses: Track your spending and cut back on non-essential expenses. This can demonstrate to lenders that you have the capability to manage mortgage repayments.

4. Consider a Co-borrower: Applying with a partner or family member can increase your total income, thereby enhancing your borrowing capacity.

5. Shop Around for Lenders: Different lenders offer varying loan terms and interest rates. Comparing options can help you find a deal that maximises your borrowing power.

Common Mistakes to Avoid

• Overestimating Borrowing Power: Avoid relying solely on online calculators, as they may not consider all personal financial factors.
• Ignoring Interest Rates: A low interest rate can significantly affect your borrowing power and repayment terms.
• Forgetting About Additional Costs: Factor in costs like stamp duty, insurance, and legal fees when calculating your borrowing budget.

How Esteb and Co Can Help

At Esteb and Co, we specialise in guiding Australians through the mortgage process. Our experienced brokers can assess your unique financial situation, helping you understand your borrowing power and navigate the complexities of securing a loan. We offer personalised advice and competitive rates to help you achieve your homeownership dreams.