1. What is the Westpac Borrowing Capacity Calculator?

The Westpac Borrowing Capacity Calculator estimates how much you may be able to borrow based on your income, a lender-specific multiplier, and your existing debts. This calculation helps potential borrowers understand their borrowing limits before applying for a loan.

2. How Does the Calculator Work?

The calculator uses the Westpac borrowing capacity formula:

Where:

• \( Income \) — Your annual or monthly income in dollars
• \( Multiplier \) — Lender-specific multiplier (typically 4-6 for most lenders)
• \( Debts \) — Your total existing debt obligations in dollars

Explanation: The formula calculates your maximum borrowing capacity by multiplying your income by a risk-adjusted multiplier, then subtracting your existing debt obligations.

3. Importance of Borrowing Capacity Calculation

Details: Understanding your borrowing capacity is crucial for financial planning, determining your home buying budget, and ensuring you don't overextend yourself financially when applying for loans.

4. Using the Calculator

Tips: Enter your income in dollars, the appropriate multiplier (check with your lender), and your total existing debts. All values must be non-negative numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical multiplier value used by Westpac?
A: Westpac typically uses multipliers between 4-6, but this can vary based on individual circumstances, loan type, and current lending policies.

Q2: Should I include all types of income?
A: Include all verifiable, regular income sources. Some lenders may only consider a percentage of bonus or overtime income.

Q3: What debts should be included in the calculation?
A: Include all ongoing debt obligations such as credit cards, personal loans, car loans, and existing mortgage payments.

Q4: Is this calculation definitive for loan approval?
A: No, this is an estimate only. Final loan approval depends on credit history, employment stability, and other factors assessed by the lender.

Q5: How often should I recalculate my borrowing capacity?
A: Recalculate whenever your financial situation changes significantly - after a pay raise, when taking on new debt, or when paying off existing debts.