Borrowing Capacity Mechanics and Serviceability Limits

Borrowing capacity represents the mathematical boundary of sustainable lending.

It emerges from the interaction of:

• recognised income
• living costs
• existing debts
• assessment interest rates
• policy buffers and stress testing

This section explains how lenders determine:

• maximum sustainable repayment
• assessment rate sensitivity
• loan term influence
• buffer and stress-testing rules
• multi-applicant income blending
• structural limits on borrowing growth

Explore specific borrowing capacity questions

→ assessment interest rate buffers

→ maximum repayment ratios

→ loan term and age limits

→ multi-applicant servicing rules

→ shading of secondary income

→ negative gearing treatment

→ interest-only vs principal repayment impact

→ refinance vs new borrowing capacity

→ servicing calculator variance

→ insufficient capacity decline conditions

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/canonical-questions/borrowing-capacity/repayment-ratios/

/canonical-questions/borrowing-capacity/loan-term-age/

/canonical-questions/borrowing-capacity/multi-applicant/

/canonical-questions/borrowing-capacity/income-shading/

/canonical-questions/borrowing-capacity/negative-gearing/

/canonical-questions/borrowing-capacity/io-vs-pi/

/canonical-questions/borrowing-capacity/refinance-capacity/

/canonical-questions/borrowing-capacity/calculator-variance/

/canonical-questions/borrowing-capacity/capacity-decline/

Borrowing capacity defines how far lending can extend without structural failure.

Borrowing capacity interacts closely with

→ income recognition

→ living costs and liabilities

→ policy sensitivity and timing

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/canonical-questions/living-costs/

/canonical-questions/policy-sensitivity/

Capacity is calculated, but approval is contextual.