By Niko Iliakis ·
Fact Checked
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On this page:
- First of all, what is borrowing power?
- Will different banks lend you different amounts?
- What can I do if I can’t borrow enough?
- What if my home loan application was rejected?
So you’ve got your sights set on a home, spoken to a bank, and gotten an idea of how much you can borrow. The only problem is the amount is a bit lower than you’d like. Thankfully, there are a few things you can do to boost your borrowing power.
First of all, what is borrowing power?
Put simply, your borrowing power is the amount that a bank is willing to lend you. If you’re on solid financial footing and can show you’re responsible with your money, banks will be much more comfortable lending you the amount you want.
To determine your borrowing power, your lender will take into account your income, living expenses, and any other financial commitments you might have. They will also scan your credit history for signs that you can be trusted to pay off your debts on time.
Will different banks lend you different amounts?
Lenders assess applicants in different ways, which means the amount you can borrow will vary depending on who you talk to. You can test this by trying out the borrowing calculators on different banks’ websites and seeing how the results vary.
If the difference between two lenders is significant, they might have different protocols around debt-to-income ratios (DTI).
Your DTI is the sum of your debts and liabilities divided by your gross income. For example, if both you and your partner earn $60,000 per year and want to take out a home loan of $500,000, your lender will calculate your DTI using the following formula:
- $500,000 ÷ $120,000 = DTI of 4.2
Banks set their own caps on DTI ratios for borrowers, which means that the amount different banks might be willing to lend you can vary by an entire year’s salary.
Other reasons might be at play too. For example, newer lenders tend to exercise more caution when assessing potential borrowers. That’s because a customer defaulting on their loan will have much more of an impact on a smaller lender than a larger, more established one.
What can I do if I can’t borrow enough?
Your borrowing power, as determined by a particular lender, isn’t set in stone. Here are a few things prospective homebuyers can do to increase it:
- Increase your income
- Cut back on expenses
- Pay off any debts
- Reduce your credit limits
- Check your credit report for mistakes
- Save a larger deposit
- Try a different lender
- Co-borrow with a parent
Increase your income
This is one of the most obvious ways to boost your borrowing power, but by no means the easiest. If possible, ask your employer for a raise, apply for a higher paying job, or consider taking on a second job.
Cut back on expenses
Your lender will want to see recent bank statements to get an idea of where your money is going each month. If you can rein in your spending (cancelling idle subscriptions and shopping around for better deals on utilities are a good place to start), it can raise your standing in banks’ eyes.
Pay off any debts
If your existing debts are excessive, lenders will be reluctant to saddle you with much more. Try to pay off your credit card in full during the interest-free period, and tackle any other debts you have so they don’t snowball any further.
Reduce your credit limits
When calculating your borrowing power, lenders will assume your credit cards are usually drawn to their full limit, so try to lower your credit limits where you can. And if you have any unused cards it’s a good idea to cancel them altogether.
Check your credit report for mistakes
Obtain a copy of your credit report and check it for any errors that could be influencing your bank’s assessment of you. If there are inaccuracies or listings you can contest, you should contact your bank (and subsequently the credit reporting body) to set the record straight.
Note: In Australia, you can request a free copy of your report once every 12 months from a credit reporting body (such as Equifax, Experian and CheckYourCredit).
Save a larger deposit
There are plenty of benefits to having a larger deposit, including smaller monthly repayments and being less vulnerable to interest rate hikes. But it also signals to your lender that you can set aside enough money each month to service a mortgage.
Try a different lender
If the amount one bank is willing to lend you falls slightly short of your expectations, it might be worth chatting with another bank to see if they are willing to go higher. As mentioned above, lenders approach risk assessment in different ways and some may be less strict than others.
Co-borrow with a parent
Two sets of income will inspire much more confidence in your lender than just one. If a parent is willing to put their name on your mortgage application, it can go a long way towards helping you qualify for the loan you want. Just keep in mind that if your parents already own a home, you won't be eligible for any stamp duty concessions available to first home buyers.
What if my home loan application was rejected?
If your home loan application was rejected outright, it means that your lender does not believe you would be able to service a mortgage without falling into financial hardship.
Whether they identified red flags on your credit report or the loan you requested just wasn’t suitable given your current income and savings, you’ll need to make some big changes before you can re-apply.
Focus on improving your credit score by paying your bills on time, keeping credit card balances low, and only applying for credit when you really need it.
A budget can also help by giving you a picture of how much money is coming and going each month. From there, you can identify and eliminate any unnecessary expenses and boost your savings over time.
For more tips, browse our home loan serviceability guide. And if you’re unsure where to start when it comes to finding a loan, visit our home loans comparison page for a look at what’s available.
Home loan comparisons on Mozo- last updated 9 April 2024
Search promoted home loans below or do a full Mozo database search.Advertiser disclosure
Featured Product
Mozo experts choice awards won:
- Low Cost Home Loan - 2024
For more information about these awards go here.
Unloan Variable
Owner Occupier, LVR <80%
interest rate
comparison rate
Initial monthly repayment
5.99% p.a. variable
5.90% p.a.
Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
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Unloan Variable
Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
- interest rate
- 5.99% p.a. variable
- comparison rate
- 5.90% p.a.
- interest rate
- 5.99% p.a. variable
- comparison rate
- 5.90% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $10,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Unloan Unloan Variable
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Basic Home Loan
Fixed, Owner Occupier, Principal & Interest, LVR<70%
interest rate
comparison rate
Initial monthly repayment
5.99% p.a.
fixed 3 years6.13% p.a.
No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.
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Basic Home Loan
No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.
- interest rate
- 5.99% p.a.
fixed 3 years
- comparison rate
- 6.13% p.a.
- interest rate
- 5.99% p.a.
fixed 3 years
- comparison rate
- 6.13% p.a.
- Upfront fees
- $350
- Ongoing fees
- $0.00
- Discharge Fee
- $400.00
- Extra repayments
- yes - up to $10,000 p.a.
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 70.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Fixed
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Macquarie Basic Home Loan
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Mozo experts choice awards won:
- Exceptional Value Home Lender - 2024
For more information about these awards go here.
Express Home Loan
Owner Occupier, Principal & Interest, LVR <90%
interest rate
comparison rate
Initial monthly repayment
6.01% p.a. variable
6.14% p.a.
Get fast online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.
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Express Home Loan
Get fast online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.
- interest rate
- 6.01% p.a. variable
- comparison rate
- 6.14% p.a.
- interest rate
- 6.01% p.a. variable
- comparison rate
- 6.14% p.a.
- Upfront fees
- $134
- Ongoing fees
- $10.00 monthly
- Discharge Fee
- $350.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 90.00%
- minimum borrowing amount
- $5,000
- maximum borrowing amount
- $3,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Bendigo Bank Express Home Loan
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Neat Home Loan
Owner Occupier, Principal & Interest, LVR <60%
interest rate
comparison rate
Initial monthly repayment
6.14% p.a. variable
6.16% p.a.
Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.
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Neat Home Loan
Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.
- interest rate
- 6.14% p.a. variable
- comparison rate
- 6.16% p.a.
- interest rate
- 6.14% p.a. variable
- comparison rate
- 6.16% p.a.
- Upfront fees
- $250
- Ongoing fees
- $0.00
- Discharge Fee
- $300.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 60.00%
- minimum borrowing amount
- $80,000
- maximum borrowing amount
- $5,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the ubank Neat Home Loan
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Offset Home Loan
Package, Owner Occupier, LVR<60%, Principal & Interest
interest rate
comparison rate
Initial monthly repayment
6.15% p.a. variable
6.40% p.a.
Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.
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Offset Home Loan
Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.
- interest rate
- 6.15% p.a. variable
- comparison rate
- 6.40% p.a.
- interest rate
- 6.15% p.a. variable
- comparison rate
- 6.40% p.a.
- Upfront fees
- $350
- Ongoing fees
- $248.00 yearly
- Discharge Fee
- $400.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 60.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Macquarie Offset Home Loan
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Niko Iliakis
Money writer
Niko Iliakis is a finance journalist at Mozo specialising in home loans, property and interest rate movements. With an eye for facts and figures, Niko deep-dives into topics to help readers understand key info and make more informed financial decisions. He is ASIC RG146 (Tier 2) certified for general advice.
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*WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
**Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circ*mstances and interest rate changes.
^See information about the Mozo Experts Choice Home Loan Awards
Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.
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