Borrowing
Small inputs, big swings
How a credit-card limit, novated lease or interest-only term can move borrowing capacity by hundreds of thousands.
Most buyers think borrowing capacity is set by income. It isn’t. Income is the ceiling, but four or five small line items decide where, under that ceiling, the bank actually lands. Move them, and the same household can shift its capacity by $200k–$400k without earning a cent more.
$5k
Credit limit costs ≈ $25k borrowing power
$1k/mo
Novated lease ≈ $130k less borrowing
+1y
Interest-only term shrinks capacity ~7%
The five levers, ranked by impact
Approximate impact on borrowing capacity (single PAYG, $180k income)
$ change in capacity
Why each one moves the needle
- Credit-card limits. Banks assess on the limit, not the balance. A $20k limit you never use still costs you ~$100k of borrowing capacity.
- Novated leases. Treated as a hard liability with no asset offset. The biggest silent killer of capacity in two-income households.
- Interest-only terms. Lenders reverse-engineer P&I repayments over the remaining term. The shorter the remaining P&I window, the higher the assessed payment.
- HELP/HECS. Treated as a percentage of gross income, before tax. A $90k balance can clip 5–8% of capacity.
- BNPL & “small” recurring debits. Captured by most major lenders’ statement scrapers and assessed as ongoing commitments.
You don’t need to earn more to buy better. You need to spend differently, for 90 days.
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FAQ
Frequently asked
- Which input matters most for property returns?
- Capital growth rate has the largest long-term impact, followed by holding period, then interest rate. Yield matters mostly for serviceability and cashflow, not total return.
- How much does a 0.5% rate cut actually save me?
- Roughly $5,000/yr per $1M of debt, or ~$125k over a 25-year loan. Refinancing every 2–3 years to stay competitive often beats fixing for 5 years.
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Written & reviewed by
The NOVAQ founders
Every NOVAQ article is written or reviewed by our founders, both Chartered Accountants who actively invest in Australian property. Not journalists, not interns.
Shreyas Doshi
Co-Founder · Chartered Accountant
15+ yrs in international tax, compliance, structuring and advisory across Deloitte, PwC and a large multinational mining company. Multi-state personal portfolio under different structures.
Yuvraj Kapadia
Co-Founder · CA, CPA, SMSF Specialist
ASIC-registered SMSF Auditor, Tax Agent, licensed Finance & Mortgage Broker and Buyer's Agent. Multi-state personal portfolio under different structures.
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