Knowing your borrowing capacity before making an offer means having your income, debts and loan structure assessed against lender policy before you negotiate. The price you offer, the length of the finance clause and the settlement date are then set against a figure you can sustain, not against a guess.
On episode 102 of the podcast, a buyer's agent, an accountant and a financial planner joined Dion to talk about buying when sentiment is weak. Dion's contribution was the finance one: negotiating strength comes from knowing your borrowing capacity before you make an offer, not after.
Why does a softer market reward prepared buyers?
Because there are fewer buyers to compete with, and the ones who remain have more room to ask for what they need. According to Cotality, Brisbane dwelling values in August 2026 were 2.7% below their May 2026 peak (our lending snapshot). When values ease, vendors become more open on terms as well as price.
Fear does not create value on its own. It creates space. The buyers who withdraw are usually the ones who were never fully prepared. That is not a reason to buy because the market is soft. It is a reason to be organised enough that a softer market is useful to you.
What becomes negotiable besides the price?
- The finance clause. A longer period gives the lender time to assess and value the property properly.
- Building and pest conditions. Genuine conditions, not ones waived to win a contest.
- The settlement date. A timeline that suits your funding, not only the vendor's calendar.
- The deposit and access terms. Sometimes open to discussion when competition is thin.
The wording of any contract condition is a matter for your solicitor or conveyancer. The finance side is knowing which of these you actually need, and that comes from the assessment.
What is the difference between guessing and knowing?
| Guessing your capacity | Knowing your capacity | |
|---|---|---|
| Offer price | Set by the asking price and nerves | Set by a figure you can sustain |
| Finance clause | A hope that it will be long enough | Sized to the lender and the property |
| Speed | Starts after the contract is signed | Most of the work is already done |
| Negotiation | Overreach or hesitate | Calm, and able to walk away |
| Risk | Finance falls over late | Problems found before you commit |
One of the opportunities the panel described was a property where a previous buyer's finance had fallen over. Every one of those is a buyer who found out their position after signing.
What does a proper assessment involve?
More than an online calculator. A calculator knows the numbers you type in. It does not know lender policy, how your income type is treated or how your existing loans are structured. A proper assessment looks at:
- Income, as a lender reads it. Salary, bonuses, self-employed income and rent are each treated differently.
- Existing debts. Including limits on cards and facilities you do not use.
- The buffer. New lending is assessed 3 percentage points above the actual rate (APRA, May 2026).
- Structure. Which entity buys, what secures the loan and where the deposit comes from.
- Costs. Stamp duty, legal fees and a cash reserve after settlement.
The result is not a promise of approval. It is an informed view of your position, and every application is still subject to the lender's own assessment of you and the property.
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Is the maximum the right amount to borrow?
Rarely. The most a lender will advance and the most you should borrow are different numbers. The first is set by policy. The second is set by your plan: what the repayments do to your cash flow, what capacity is left for the purchase after this one and how the debt behaves if rates or income move.
For an investor building a portfolio, using every dollar of capacity on one property can close the door on the next. That is a sequencing question, and it is answered before the offer.
How long does an assessed position last?
Not indefinitely. Rates change, lender policy changes and so does your income. A position worked out six months ago should be refreshed before you rely on it. The equity you plan to use should be checked the same way: see equity mapping.
Common questions
Should I work out my borrowing capacity before making an offer?
Yes. Having your borrowing capacity assessed before you make an offer lets you set the price, the finance clause and the settlement date against a figure you can sustain. It also brings problems to the surface before you sign a contract, not after.
Is an online borrowing calculator accurate?
It is a rough guide. A calculator works from the figures you enter and does not know individual lender policy, how your income type is treated or how your existing loans are structured. Actual borrowing capacity can be higher or lower once those are assessed.
What can I negotiate besides the price in a buyer’s market?
When competition is thin, terms become negotiable as well as price: a longer finance clause, genuine building and pest conditions and a settlement date that suits your funding. The wording of any condition is a matter for your solicitor or conveyancer.
Should I borrow the maximum a lender will approve?
Not automatically. The maximum a lender will advance is set by its policy. The right amount depends on your cash flow, your plan for later purchases and how the debt behaves if rates or income change. All lending is subject to individual assessment and lender criteria.
The takeaway
A softer market gives prepared buyers more to negotiate with. Preparation means the assessment is done first: income, debts, structure and costs, tested against lender policy before a figure is offered.
If you want your position mapped before you start looking, Book a Call. Fifteen minutes with the team will tell you whether your structure supports the next purchase.
This article is general information only. It does not take your individual circumstances into account and is not credit, tax, legal or financial product advice. All lending is subject to individual assessment and lender criteria. Speak with your own advisers before acting. Property values can go down as well as up, and nothing here is a recommendation to buy any property.