Estimating James and Sally’s Borrowing Power

To help their daughters step into the Sydney property market, we analysed James and Sally’s finances as of August 2025. Although some data was incomplete, we used conservative assumptions based on Australian lending standards to estimate their borrowing capacity.

Key Financial Summary

Home (PPOR): Inner West Sydney, valued at $2.2 M, fully owned
Investments:
- QLD (Yamanto) property: $700,000 value, $490,000 mortgage
- Lane Cove SMSF property: $650,000 value, mortgage-free
Savings & Offsets: Offset account $700,000; additional savings $170,000
Superannuation: $480,000 (excluding SMSF)
Income: James $104,000 p.a. (full-time); Sally $35,000 p.a. (part-time)
Liabilities: Minimal – no personal or car loans; low-limit credit card
Daughters’ Savings: $150,000 combined upon return late 2025

Borrowing Power Estimate (Aug 2025)

1. Income Assessment

Net employment income: ~$8,250/month
Net rental (QLD): ~$2,842/month (80% of $3,553)
Total usable income: ~$11,092/month

2. Monthly Expenses

Mortgage (QLD): ~$2,782
Credit card: $200
Living (HEM): $2,500
Property costs: $711
Total: ~$6,193/month

3. Net Surplus

$11,092 − $6,193 = $4,899/month

4. Estimated Borrowing Capacity

15-year term (age-adjusted): ~$395,000
30-year term (unlikely): ~$638,000

5. Debt-to-Income Ratio

Total debt ~$885,000 vs gross income $168,000 → DTI ≈ 5.27 (within most lenders’ limits)

6. Available Security

PPOR equity: $2.2 M
Invest. property equity: $210,000
Cash & offsets: $870,000

Key Considerations

James’s age may require a shorter loan term, lowering max borrow
SMSF rental income usually not counted towards personal borrow
Offset/savings could be used or gifted to daughters
Consider guarantor setup using PPOR equity for daughters’ loans

Final Verdict

James and Sally could feasibly borrow between $350,000 and $400,000. With $870,000 in liquid funds and strong equity, they are well-placed to support their daughters via gifting, direct funding, or guarantor structures.

Next Steps

Define loan structure: new debt vs guarantor
Explore using savings to mitigate age-based term limits
Speak to a mortgage broker experienced with age-friendly lenders
Plan daughters’ post-2026 income to boost future capacity

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