Are You Asking “How Much Can I Borrow”?

How much can you afford to borrow?

How much can you afford to borrow?

So, you’re looking to either buy your first home or upgrade your existing home and the first question you ask your bank or lender is “How much can I borrow“.

This is one of the most frequent questions people ask when we first speak to them about a home loan and despite the fact that I work for Illawarra Home Loans I too was guilty of asking this question when I was looking for my first home 12 months ago.

Now there is absolutely nothing wrong with the question itself, the issue lies in where you are directing the question. If you are asking this question and expecting someone else to answer it then you’ve missed the mark.

Who Should You Be Asking?

So who should be answering your question of “how much can I borrow?”


It’s simple but again, even I did it and I’m surrounded by home loan experts and don’t worry Greg our very wise credit analyst subtly put the question back on me.

This can happen to the best of us. We get so emotionally wrapped up in wanting our own home, dream home or a bigger home and we put all of the power of those dreams into someone else when the answer really is found in you.

I manage the budget and finances at home and I have a list of all our expenses, savings and when all of our bills are paid and I still asked someone else this question.

Go Into Debt With Your Eyes Open

One of the biggest stresses in life is caused by money and in particular, debt.

Living in the Illawarra and being based in the beach side city of Wollongong, the team and I know a thing or 2 about leading a less stressful lifestyle and as part of our service we want to make sure that you get the home of your dreams but without a tonne of financial stress.

So how do you strike this balance?

Start with asking yourself – how much can I borrow?

Actually, the question should be “how much can I afford to borrow“? To answer this question you need to make sure you know what all of your expenses are – down to the very last cent.

You can start off by going through your bank statements and listing all of your bills and expenses and getting an idea of how much you are spending on things like take away, entertainment, clothes etc. Then, write down everything you buy for the next month whether it’s $0.20 or $20 write it down. I know it’s painful but you’ll learn a lot from it.

Once you see where your money is going put it in a balance sheet and see if you are in the black or in the red at the end of the month.

If you are in the red you have more money going out than coming in and you are digging yourself into a hole. Don’t worry if this is the case as once you are aware of it you can start taking action to get back into the black by cutting down on your expenses.

Once you are in a position where you have some money left over, see if there are areas where you can trim back and put savings away.

Moderation Is Key For Budgets Too

Diets Don’t Work – it’s all about a change of lifestyle. This applies to finances too and it doesn’t mean you have to go without.

Set aside pocket money for you and your partner. This money is for you to use for whatever you like. This is money that you can spend without having to ask your partner for permission or be left feeling guilty about.

You can spend it as you get it or save it for something big. It’s really important to have something that is yours to spend so you have some freedom and it will also reduce the stress in your relationship as it won’t matter if you spend $300 on a pair of shoes or $500 on a new fishing rod if you have saved and used your pocket money as it doesn’t affect the other person.

How Much Can I Borrow? The Answer:

Now that you know exactly how much money is coming in and going out you will know how much you have left over to play with.

If you are paying rent and will no longer be paying rent once you buy your home you can add your rent to the left over money also. The same rule applies if you are upgrading your home, you can add your existing mortgage payment here.

This sum of money is what you have to put towards a mortgage.

Make sure in your budget you have allowed for pocket money and savings for back up. After this, the leftover money is for your mortgage.

Calculate Your Borrowing Power

Now you can take that sum and put it into our Borrowing Capacity calculator and guess what it will spit out?

How much you can borrow.

Now, the calculator is of course only a guide so if you want to get a better idea of your position send through a call back request or call us on 02 4226 5555 and we’ll be happy to give you a hand.

Do you have any budget tips to share?

Share in the comments section below:

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About Martin Anstee

Martin is the Managing Director and co-founder of Illawarra Home Loans.


  1. Check out the new “make life better ” tab on our webpage it gives you a variable payment mortgage option and then projects your investment returns if you ivest the surplus cash. If I can help please give me a call to make your life better.



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