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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