1. What is the ANZ Borrowing Capacity Formula?

The ANZ Borrowing Capacity formula calculates how much money you may be able to borrow based on your income and existing debts. This simplified formula provides an estimate of your borrowing power according to ANZ's lending criteria.

2. How Does the Calculator Work?

The calculator uses the ANZ borrowing capacity formula:

Where:

• \( Income \) — Your annual income in dollars
• \( Debts \) — Your total existing debts in dollars

Explanation: The formula multiplies your income by 5 (a common lending multiplier) and subtracts your existing debts to determine your available borrowing capacity.

3. Importance of Borrowing Capacity Calculation

Details: Understanding your borrowing capacity is crucial when planning major financial decisions such as home purchases, investments, or business expansions. It helps you set realistic expectations before approaching lenders.

4. Using the Calculator

Tips: Enter your annual income and total existing debts in dollars. Use accurate figures for the most realistic estimate of your borrowing capacity.

5. Frequently Asked Questions (FAQ)

Q1: Is this formula used by all ANZ lenders?
A: This is a simplified formula. Actual lending decisions may consider additional factors such as credit history, living expenses, and loan purpose.

Q2: What income should I include?
A: Include all verifiable sources of income such as salary, investments, rental income, and government benefits.

Q3: What debts should I include?
A: Include all ongoing debt obligations such as credit cards, personal loans, car loans, and existing mortgages.

Q4: Are there other factors that affect borrowing capacity?
A: Yes, lenders also consider your credit score, living expenses, dependents, and the type of loan you're applying for.

Q5: Should I use this calculation for financial planning?
A: This provides a rough estimate. For accurate financial planning, consult with a financial advisor or mortgage broker.