Why Your Borrowing Power Might Soon Increase

If you're looking to buy property in Australia, recent changes in lending policies could significantly boost your borrowing capacity. This means you might be able to secure a larger loan, making your property dreams more attainable.

As someone who's helped many international clients navigate Australia's financial landscape over the past 20+ years, I understand both the opportunities and challenges involved. Let’s explore what’s changing, why it matters, and how you can prepare.

What Is Borrowing Power?

Borrowing power is the maximum amount you can borrow from a lender, usually a bank or mortgage provider, to finance a property purchase. It depends on factors like your income, expenses, savings, and the lender's policies.

For example, if your borrowing capacity is $600,000, you can consider properties up to that price point (plus additional costs like stamp duty). When borrowing power increases, your options expand.

Recent Policy Changes in Australia

In 2025, several key policy updates are making it easier for Australians and eligible foreigners to borrow more money:

• Relaxed Borrowing Restrictions: The Australian Prudential Regulation Authority (APRA) has eased some lending restrictions, allowing lenders to consider higher debt-to-income ratios for eligible borrowers.

• Looser Debt Serviceability Assessments: Lenders are now applying less conservative serviceability buffers, meaning they may accept higher borrowing ratios if your financial profile supports it.

• Enhanced Use of Overseas Income: For foreign investors and migrants, lenders are now more flexible in assessing income from overseas sources, making it easier to leverage international savings or earnings.

How Does This Impact You?

These changes could allow you to:

• Borrow up to 15-20% more than in previous years.
• Access larger loans to buy more expensive properties.
• Benefit from more flexible lending criteria if you have diverse income sources.

Eligibility Criteria and Documentation

Despite these positive shifts, certain rules remain. Here's what you typically need:

• Australian Residency or Valid Visa: Most lenders require at least a temporary resident visa or Australian permanent residency. Some are open to eligible foreign investors with FIRB approval.
• Proof of Income: Pay slips, tax returns, or overseas income verification if you’re earning outside Australia.
• Deposit Funds: Usually at least 5-20% of the property price. Sources include savings, overseas income, or gifted funds from family.
• Financial Stability: Evidence of stable employment or business income, and manageable debt levels.

Important: Your ability to meet deposit requirements and provide clear documentation varies by lender. Early engagement with a mortgage broker can help clarify your eligibility.

How International Buyers Can Benefit

Buying property in Australia as an international investor often involves extra steps. But recent policy updates are easing hurdles:

• Overseas Income Assessment: Lenders are more willing to consider income from abroad, such as earnings from overseas employment, dividends, or rental income.
• Converting Overseas Savings: If you have access to your savings held outside Australia, they can often be used as part of your deposit, provided you have proper documentation of the source.
• FIRB Approval: Foreign Investment Review Board (FIRB) approvals are now streamlined for many applicants wanting to purchase new properties, encouraging foreign investment.

Practical Tip

A quote I often share: "Your financial journey is unique. Understanding local rules and planning early makes all the difference." Engaging with a knowledgeable mortgage broker familiar with international clients can unlock better borrowing conditions.

How First-Time Buyers Benefit

For first-time buyers in Australia, these policy changes mean:

• Easier access to higher loans for your first property.
• More flexible borrowing criteria, especially if you're saving from overseas.
• Fewer barriers to entering the property market sooner.

Preparing for Your Purchase

• Save a clear source of your deposit—be it Australian savings, overseas income, or gifts.
• Keep detailed records—bank statements, income proof, and transfer documents.
• Understand the costs involved: stamp duty, legal fees, and ongoing expenses.
• Get pre-approval from a lender to know your borrowing limits.

For Property Investors

Investors stand to benefit from:

• Increased borrowing capacity, enabling larger portfolios.
• The ability to finance properties in different regions or suburbs.
• Use of rental income and other income streams in serviceability assessments.

Additional Considerations:

• Foreign investors must adhere to FIRB rules, including restrictions on buying established properties in some cases.
• Be aware of additional taxes, like the Foreign Investor Stamp Duty Surcharge.

What Else Should You Keep in Mind?

While borrowing power is improving, success still depends on your overall financial profile. Some tips:

• Maintain a healthy credit history—timely loan repayments boost your profile.
• Limit high-interest debts—credit cards or personal loans.
• Keep your savings steady—lenders favor consistent savings habits.
• Stay informed about policy updates that could further increase your borrowing ability.

Looking Ahead

Australian lending policies are continuing to evolve, aiming to support both locals and international buyers. As the country adjusts to economic conditions and global financial shifts, expect further opportunities to capitalize on increased borrowing capacity.

Remember, every financial situation is different. Consulting with a trusted mortgage broker or financial advisor ensures you get tailored advice suited to your circumstances.

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In my experience, understanding the landscape builds confidence. With recent policy adjustments, your dream of owning property in Australia is closer than ever.