Buying your first home is a significant milestone and finding the right loan for your circumstances could help get you into the property market sooner.


With such a significant financial investment, it is important to understand your borrowing power, financial commitments, and to evaluate the different loan types, features and interest rate options available.

How do financial institutions calculate how much you can borrow?

Deposits & Saving

If you are buying your first home, you will need at least 5% deposit on the cost of the property, however if you want to avoid Lenders Mortgage Insurance you’ll need at least 20%. In addition, a good pattern of savings will also help. However, if you already have a home and a mortgage, it is more about the amount of equity you have after you sell one property and buy another and use this as your deposit.


G&C Mutual Bank’s Get Ahead Start option allows parents to use some of the equity in their own home to guarantee part of a home loan taken out by their children. This gives the children the ability to borrow more, or borrow up to 100 per cent of the value of the property plus stamp duty and other upfront costs. It can also help avoid the cost of Lenders Mortgage Insurance that applies to high LVR loans. (The LVR is the amount you are borrowing, represented as a percentage of the value of the property being used as security for the loan.) 



Income is a key indicator of how much you will be able to borrow. Your financial institution will need to be comfortable that you can cover the repayment based on your salary and other normal household costs.


Financial Commitments

In addition to your income, savings and deposits, your financial institution will also look at what your expenses or outgoings will be to determine affordability. This could include other debts, credit cards, bills, and general living expenses.


When considering how much you can borrow, be sure to factor in that interest rates may increase, which would mean that your repayments will also increase. You need to ensure that you will be able to afford to make your repayments if you choose a variable rate loan and rates increase. Alternatively, you may want to consider a fixed rate loan to lock in your rate.


You can use our Borrowing Power Calculator to understand how much you can borrow, or our Loan Repayment Calculator to see how much your repayments will be – or contact our friendly team to discuss.

Additional costs

To prepare for such a significant financial investment, you should understand and consider the additional costs associated with purchasing property, for example:

  • Application fees
  • Building inspection fees
  • Stamp Duty
  • Conveyancing fees


Obtaining pre-approval means you will know exactly how much you can borrow before you start looking, making an offer or bidding at auction. Our team can review your current circumstances and tell you how much you will be approved to borrow. And if your circumstances don’t change, your pre-approval will last for 6 months.


Navigating the jargon and the buying process can feel overwhelming, but we’re here to support you on your home ownership journey so you can make your move.

Please consult with a financial adviser for personal financial advice.