When assessing your loan application lenders need to decide how much money they can lend you. They have a number of legal obligations they need to satisfy when they do this. These legal obligations are generally referred to as Responsible Lending obligations.

When evaluating your Borrowing capacity lenders will assess your income, your expenses and your commitments. It is important that you complete this section thinking of any future changes in your expenses. Here are some categories and its examples:

• Education & Training: if you, your partner or your kids are taking new classes or studies you should know the costs.
• Kids: growing kids or a new baby can have a big impact on your expenses.
• Rent: if you are buying a home to live in you will probably stop paying rent so remember to deduct it from your expenses.
• Services & Utilities: With a new home comes new bills. You will have the known ones including Gas, Electricity, Phone, Internet if you are planning to move in to the new property. But also there will be new bills that you only pay as an owner: water rates, council rates and strata fees; these can make a big dent to the money you will have available to pay off your home loan.

For the purpose of the calculation we encourage you to be as realistic as possible. If your expenses are too low lenders might use their own calculation of minimum expenses based on a family of your size. In addition, lenders will review your transaction and credit card statements to confirm the figures you put in.

This page was last updated on 19 September 2019.