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Borrowing Power Calculator

Looking to Refinance a Loan?
Measure Your Borrowing Power With Our Online Calculator

Discover your financial borrowing power with our online calculator below.
For more information, book a no-obligation chat with our team at My Money Sorted to help set you on the right path.


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Interest Rates & Your Borrowing Power

The interest rates can have a big impact on the affordability and life of a loan, and is something you should carefully consider and compare before signing any contracts. In the table below are example interest rates and how much they contribute to the overall cost of your loan. 

Loan Amount 2% Interest 4% Interest 7% Interest
$50,000.00 $600.00 $1,200.00 $2,100.00
$75,000.00 $1,500.00 $3,000.00 $5,250.00
$100,000.00 $2,000.00 $4,000.00 $7,000.00
$350,000.00 $7,000.00 $14,000.00 $24,500.00
$500,000.00 $10,000.00 $20,000.00 $70,000.00
$750,000.00 $15,000.00 $30,000.00 $52,500.00
$1,000,000.00 $20,000.00 $40,000.00 $140,000.00

Loan Terms & Phrases You Need to Know

To use the borrowing power loan calculator, you’ll need to enter some details about your income and expenses, which will help the calculator estimate your borrowing power. Below are some definitions of important terms and phrases that are included in the calculator and are important to understanding the borrowing process:

  • Borrowing Amount —
    The amount of money you are looking to borrow from a lender under a personal loan agreement, including any fees included in the loan.
  • Interest Rate —
    This is the interest rate the lender will apply to your personal loan, and is used to calculate both the total amount of interest you will pay over the loan period and your scheduled repayment amount. Personal loan interest rates can be fixed or variable: If you have a variable rate of interest, you will have difficulty accurately determining your payments over the life of your loan.
  • Loan Term —
    The length of your personal loan as dictated by your loan agreement. The shorter your loan term, the higher your scheduled repayments will be. Your loan term is important as it will allow you to accurately calculate your monthly, fortnightly, or weekly payments through an Annual Percentage Rate (APR) calculation, provided you are working with a fixed interest rate.
  • Establishment Fees —
    Any upfront fees charged by the lender when creating the secured personal loan agreement. Establishment fees are included in the calculation for your repayments to provide a more accurate total loan amount.
  • Gross Income —
    Gross income is the amount of money you earn before tax is taken out of your pay. After tax income is known as Net Income.
  • Expenses —
    Every person has different kinds of expenses. For ease of use, we’ve divided expenses into three categories: Monthly Living Expenses (rent, food, petrol, bills, etc.), Loan Repayment Expenses (repayments on an existing loan such as a personal loan or car repayment), and Credit Card Limits (so the total amount of all your credit card limits, i.e. if you have two credit cards, one has a $5,000 limit and the other has a $10,000 limit, the total limit would be $15,000).

Once you have filled in your income and expenses details, simply click on ‘Borrowing Power’ to view an estimated amount and repayment details.

You can then select Monthly, Fortnightly, or Weekly repayments to see what your repayment amount will be at various frequencies. You can also click on ‘Show Me’ under Need More Options? to adjust different loan aspects such as Loan Term, Loan Type and Interest Rate to see how you can maximise your borrowing power.

If you are calculating a loan with variable interest, you will only be able to calculate the current repayment amount based on the current rate of interest, as variable rates are subject to change. Learn more about variable and fixed rates.

Borrowing Power FAQs

Calculator Disclaimers

  • This is a model, not a prediction. Amounts and repayment periods are estimates only, actual amounts may be higher or lower.
  • Results are based on information you have provided and do not take your personal circumstances into account.
  • It applies to loans where your regular repayment includes both interest and the gradual repayment of the amount borrowed.
  • Initial inputs will be displayed on the left hand side of the graph. Your ‘What if’ scenario (if applicable) will be displayed on the right hand side of the graph.
  • It is not intended to be your sole source of information when making a financial decision. You may wish to consider getting advice from a licensed finance professional.
  • Using this calculator does not guarantee you will be eligible for a loan. You will need to satisfy your lender’s lending criteria.
  • The average interest rate is taken from Economic and Financial Statistics data published by the Reserve Bank of Australia. https://www.rba.gov.au/statistics/tables/xls/f06hist.xls

What is Borrowing Power?

Borrowing power’ refers to the amount of money that an individual, business, or government can borrow from a lender, based on their financial position, current debts and liabilities, etc.

What is the Formula for Calculating Borrowing Power?

To calculate an applicant’s borrowing power, the lender will generally look at your net income and subtract the total cost of expenses which can include the cost of dependents, rent, loan repayments, utilities, insurance, etc.

How are Loan Repayments Calculated?

The simple formula for calculating personal loan repayments is: Loan Amount / Discount Factor.

The complexity of the calculation is in determining the discount factor, which is calculated by dividing the interest rate of your loan by the number of payments per year (12 for monthly, 26 for fortnightly, or 52 for weekly) to first obtain the Periodic Interest Rate.
The discount factor formula on your personal loan is expressed as: (((1 + i) ^n) – 1) / (i (1 + i)^n)
  • n = the number of repayments
  • i = the annual interest rate

Does Borrowing Power Include Your Deposit?

Your borrowing power is the amount of money you can feasibly afford to pay off now and into the foreseeable future – your deposit is separate from this amount. However, it is relevant in that the larger your deposit, the more money you’ll have to put toward the subject of the loan (a house, a car, etc,).

What is a Good Debt-to-Income Ratio in Australia?

There is a fairly wide margin for a “good” debt-to-income ratio:
  • Excellent DIR: Less than 10%
  • Good DIR: 10-20%
  • Bad DIR: More than 20%
If your DIR exceeds 20%, then you should consider revising your debt load.

How Can I Increase My Borrowing Power?

There are a variety of ways to increase your borrowing power. Here are a few ideas:
  • Improve your credit score
  • Reduce debts and liabilities
  • Reduce monthly expenses
  • Save more money towards your deposit

More Money Calculators to Try

Take a deep dive into your finances with the help of our finance calculators – whether you’re looking to refinance, sell your property, or create a budget, our calculators can help you get started.

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