Most buyers start by looking at houses. The smart ones start with finance.
If your finance isn't sorted, you can't move when the right property comes up. You might fall for a home you can't afford, or lose one you could have. Here's how to get finance-ready before you start searching, and before you engage a buyer's agent.
Borrowing power is not purchasing power
Your borrowing power is the loan the bank will give you. Your purchasing power is the price you can actually pay. They're not the same number. Purchasing power is your borrowing power, plus your deposit or usable equity, minus stamp duty and buying costs. For example:
Borrowing power: $700,000
Plus deposit or equity: $150,000
Less stamp duty and costs: $45,000
Purchasing power: $805,000
That's an illustration only. Stamp duty and costs depend on the state, the price and whether you're a first home buyer.
What the bank actually checks
Income and living costs. What comes in, what goes out, and how stable it is.
Debts and credit limits. Car loans, HECS and even unused credit card limits count against you.
The rate buffer. Banks test you at around 3% above the actual loan rate.
Debt-to-income. Banks are limited in how many loans they can write at six times income or more.
Lender policy. Every lender treats rent, bonuses and self-employed income differently.
Quick wins: cancel credit cards you don't use, pay down small debts and get your paperwork in order before you apply.
Your equity is worth less than you think
If you already own property, equity can fund your next deposit. But banks won't let you use all of it. Most lenders start at 80% of their valuation, then take off what you owe. On an $800,000 property with a $400,000 loan, that's about $240,000 of usable equity, not $400,000. And the bank's valuation is often lower than you hope.
Get your structure right from the start
A bad loan structure can lock up your equity for years. A few things to talk through with your broker:
Keep each property on its own loan, rather than cross-securing them
Interest-only or principal and interest, depending on your plan
An offset account, not just redraw
The order you use lenders in, if you plan to keep buying
A cash buffer for vacancies, repairs and rate rises
Use a broker, not just your bank
Your bank can only offer its own loans. A mortgage broker compares a wide panel of lenders and can find one that suits your situation, especially if you're self-employed, buying before you sell, or building a portfolio. Brokers are usually paid by the lender, so there's often no cost to you.
Get pre-approved before you search
Pre-approval tells you what you can spend and shows selling agents you're serious. It also means you can make an offer or bid at auction the moment the right property comes up. Pre-approvals expire, usually after a few months, so time it with your search.
Why we ask about finance first
You shouldn't pay a buyer's agent to search for a property you can't buy. That's why our first step is to line up your finance with one of our trusted broker partners. And it's why we offer a finance guarantee: if one of our recommended brokers can't get you pre-approved, or can't give you the confidence to proceed, we refund your engagement fee in full. See how it works on our property finance page.
Book your free consultation
Want to know what you can really spend? Start with a quick discovery call. We'll map out your goals and equity, then introduce you to the broker we recommend. Book your free consultation.
The Monopoly Wealth Property Buyers Team
Originally published on monopolywealth.com.au. General information only. Monopoly Wealth Property Buyers does not provide credit advice; credit advice is provided by licensed mortgage brokers. Lending rules current as at October 2026 and may change. QLD licence 4540622.
