How Borrowing Capacity is Calculated
Understanding APRA servicing buffer stress tests and borrowing limits.
Core Assessment Analysis
Borrowing capacity is not a simple calculation of salary times five. Lenders evaluate your scenario at a stressed interest rate that is ~3.0% higher than the product interest rate you will actually pay. If your variable rate is 6.2%, the bank tests your capacity at 9.2% on a principal and interest basis. Your Net Quality Ratio must remain positive at this inflated rate to secure approval.
Why Underwriters Focus Here
APRA macroprudential controls dictate that all current household credit exposures must be stressed against systemic interest rate moves to ensure credit resilience.
Key Outcome Assessment Factors
Regulator buffer rate settings, personal gross income, and existing personal debts.
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