Deep Dive - Borrowing Capacity vs Purchase Capacity

In this episode of You Have My Interest, we’re taking a closer look at the difference between borrowing capacity and purchase capacity - two terms that are often used interchangeably but can lead to very different outcomes when planning to buy a property.

This topic was prompted by a recent client scenario, where a buyer was exploring the option of using a lenders mortgage insurance (LMI) waiver due to having a smaller deposit. After reviewing their situation and running the numbers, we actually recommended that they proceed with paying LMI instead. Why? Because it gave them access to a higher loan-to-value ratio and increased their overall purchase capacity.

Throughout this episode, we break down how deposit size affects what you can buy, why borrowing capacity doesn't always equal your maximum purchase price, and when paying LMI can actually be the more strategic move.

 If you're planning a property purchase or reassessing your options, this conversation will help clarify what’s possible — and how to approach your finances in a way that works for your goals.

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You Have My Interest provides information and educational content relating to mortgages, finance and property. You Have My Interest's content is general in nature and does not take into account the individual financial, legal or tax needs or objectives of its audience members.

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