When they assess your home loan application...

[Fuzzywuzzy]

So when we go for the loan, if we are pre-approved for one amount, we cannot get any more than what they assess is our serviceability? Even if the contracted interest rate is lower and assessing at the rate increases our serviceability? That's how the mortgage broker made it out to be - we'd get more money going for a different product, because they assess it at a lower rate than they assess serviceability.

This is so confusing. I think he was a total douche

He is speaking the truth It is possible to borrow a higher amount if you take out a loan on a lower interest rate than your borrowing capacity was based on. If you are concerned about it, get the bank or broker to run your serviceability again based on the lower interest rate of the loan product you think you'd apply for so you have an exact figure. Generally we like to be on the safe side (ie. borrowing a little bit less than your maximum borrowing capacity) to ensure that the loan goes through no problems.

Gee, I hope that makes sense, let me know if you want me to explain it more

[RhiChiChi]

He is speaking the truth It is possible to borrow a higher amount if you take out a loan on a lower interest rate than your borrowing capacity was based on. If you are concerned about it, get the bank or broker to run your serviceability again based on the lower interest rate of the loan product you think you'd apply for so you have an exact figure. Generally we like to be on the safe side (ie. borrowing a little bit less than your maximum borrowing capacity) to ensure that the loan goes through no problems.

Gee, I hope that makes sense, let me know if you want me to explain it more

Exactly!

The thing is, if they assessed your affordability on todays interest rates and their calculation showed you could afford it, what happens if the interest rates go up tomorrow? That is why they base it on a higher rate than the current interest rates. Hope this makes sense

[Indadhanu]

We have been working it all out if the interest rates rise quite high, we aren't after much more though, only an extra $10,000-$15,000. Would mean the difference between a 2br unit and a 3br house!