Sat, 2008-04-05 02:00

Loan serviceability takes into account all available income such as wages, pensions, self employed income etc then takes away an allowance for living expenses and other liabilities such as other loans. Hopefully there is a positive cash surplus remaining and this cash surplus will determine the maximum loan amount the borrowers can afford.
Because many lenders use different policy and calculations to establish borrowing capacity there are almost allways differences in the maximum home loan amounts various lenders are willing to lend.
Differnt types of income will alter the amount you are able to borrow from various lenders. For example one lender may only allow 50 percent of a specific income type such as rent while others may allow 100 percent to be used in servicability calculations.
Available deposit will also have a bearing on maximum home loan size and the value of properties you may be able to consider.
If you are using the services of a finance broker to establish borrowing capacity, chances are the broker uses an advanced home loan qualifier program.
The ActiveClient qualifier helps customers compare home loans by calculating an averaged annual percentage rate which factors in setup costs, interest rate, ongoing fees and charges and exit costs over a specified time frame.
This functionality will help you decide the type of loan you are most comfortable with while establishing your borrowing capacity. Before we discuss choosing the lender and loan type in too much detail there are some other details to discuss before returning to choosing a loan type and lender.
The best way to assess your servicability options across a wide range of lenders is to contact a finance broker who uses advanced home loan qualifier computer software.
There is a guide to borrowing capacity which is often also referred to as loan serviceability at this page explaining loan serviceability.
Once your borrowing capacity is known it is time to get to know your property market.