How much can I afford
                     How much can 
I afford | Home 
Loan Guide | 
Osprey 
Mortgage 
Lending
W W W. O S P R E Y M O RT G A G E L E N D I N G . C
O M
How to Balance income and 
expenses
 It’s about placing your incoming versus outgoing money.
 What you can afford should always be to draw up a real budget showing what 
money is coming in and what will still need to go out once you take out your 
home loan.
 Don’t forget to include existing loans, credit cards and other debts.
Use a ‘How much can I borrow 
calculator’
 You can use an online borrowing calculator to give you an indication of what you 
may be able to borrow.
 A borrowing power calculator will ask you to enter sources of income, as well as 
all your expenses and then give you an idea of how much a lender thinks you may 
be able to borrow. 
How your credit score affects 
your borrowing power
 What you earn and What you spend
 When they’re considering how much you can borrow, a lender will also factor in 
your access to any other credit – such as personal loans, home loans and even 
credit cards, even if you don’t owe anything on them. That’s because they need 
to factor your need to meet these potential repayments into your capacity to 
repay a home loan.
The bigger your deposit, the 
more you can afford
 If you need to borrow more than 80% of the home’s value, a lender will ask you to 
pay the lender’s mortgage insurance (LMI), which is an insurance that covers the 
lender if you are unable to meet your loan obligations. So the cost of paying for 
this will eat into the amount you have to spend on your new home.
Handling account of changing 
possibilities
 Finally, when you’re considering how much you can afford, you shouldn’t simply 
look at your current circumstances but also your future ones.
 A good approach is usually to leave a ‘buffer’ of at least a mortgage repayment or 
two in your savings account, just in case you need it. You may also consider 
taking out income protection insurance or mortgage protection insurance to help 
you meet your loan repayments if you’re off work for some time due to illness, 
accident or trauma.
 After all, it’s always better to be enjoying your new home than worrying about 
how you’re going to pay for it.
CONCLUSION
 The clearest way to know what you can afford is to speak to a lender about 
conditional approval. Conditional approval is a type of preliminary approval or 
“pre-approval” from a lender, indicating that you should be approved for a home 
loan up to a certain dollar limit. A lender will work with you to assess your 
situation and give you a realistic picture of how much you can borrow.
INFORMATION 
SOURCE
WWW.OSPREYMORTGAGELENDING.COM