Borrowing Power Calculator for Geelong Home Loans

The formula. We take your gross household income, apply a simplified tax rate to get net income, then subtract a baseline cost-of-living plus your declared monthly commitments. The remaining surplus is converted into a loan amount using the standard amortising repayment factor at the assessment rate (your expected rate plus the regulator's 3% buffer) over your loan term: monthly = principal x (rate / 12) / (1 - (1 + rate/12)^(-months))

Where the numbers come from.

• You enter your expected rate. Whatever variable rate you expect a lender to offer. An experienced broker can give you the current panel best in writing.
• We add a 3% buffer for you. Required by APRA prudential guidance (the Australian Prudential Regulation Authority, the banking regulator). Lenders assess at your real rate + 3%, not at your real rate. Source: apra.gov.au. The result panel above shows the assessment rate used.
• Cost-of-living baseline. We model the Household Expenditure Measure or HEM (the standard cost-of-living index used by Australian lenders): $2,200 per month for two adults plus $600 per dependant. Lenders apply this OR your declared expenses, whichever is higher.
• Tax simplification. A single-bracket effective rate (16% under $45k, 27.5% under $135k, 37% above) - close enough for an indicative number but not exact. Real lenders use the full ATO scale plus the Medicare levy.
• Loan term. Default 30 years on a principal-and-interest amortising loan (you pay both the loan balance and the interest each month, and the balance reduces over time). You can change it.
• Reference implementation. Method based on ASIC MoneySmart calculators (moneysmart.gov.au) - the regulator's own consumer tools.

Why your real lender number can differ by 10-25%. Every lender runs its own serviceability calculator with proprietary income-shading rules (how casual, rental or bonus income is counted), different HEM thresholds, different existing-credit-card calculations and different stress-test floors. An experienced broker maps your file to the lender that fits best on policy the first time - that is why a 30-minute review beats any one calculator.