Australian Mortgage Scenario Simulator
Most borrowing calculators answer one question: "how much can I borrow today?" The far more useful question when you are planning a purchase is "what changes that number, and by how much?" This scenario simulator is built to answer the second one. You set a base profile — income, credit-card limit, living expenses, savings and target price — then flip a single lever and watch three results move at once: your borrowing power, the time to a 20% deposit, and the cash you need at settlement.
The reason a what-if view matters is that Australian lending is governed by binding rules that interact in non-obvious ways. APRA requires lenders to assess your repayments at your contract rate plus a serviceability buffer of 3.00 percentage points, and a separate debt-to-income (DTI) cap limits most new lending to roughly six times gross income. An undrawn credit card counts against you at 3% of its limit per month regardless of the balance, so a card you never use still shrinks your capacity. Because these constraints can each be the binding one, the same dollar of improvement helps a lot in one profile and barely at all in another — which is exactly why you simulate rather than guess.
The four levers this tool models are the ones that move the needle most for real buyers: clearing a credit-card limit, adding a partner's income, saving more each month, and targeting a cheaper suburb. In the worked example below, a single applicant earning $95,000 with a $20,000 card sees borrowing power jump from $268,000 to $341,000 just by cancelling that card — an extra $73,000 of capacity for zero dollars spent.
One caveat applies throughout: the contract rate (6.2% p.a.), the RBA cash rate behind the savings projection (4.10%) and the 7%/year price-growth figure are illustrative assumptions, not forecasts, and the HEM living-cost benchmark is an indicative approximation. Treat every output as a what-if scenario to discuss with a broker, not a credit decision.
How the simulator computes each result
The engine recomputes three metrics for your base profile and again for the modified profile, then shows the difference.
1. Borrowing power (the binding-constraint test)
Capacity is the lower of two ceilings:
- Net Income Surplus (NIS) capacity. Monthly gross income, minus income tax + 2% Medicare levy, minus any HECS/HELP repayment, minus 3% of your total credit-card limit, minus car/other debt repayments, minus the greater of your declared living expenses and the HEM benchmark. That surplus is then converted to a loan with a 30-year reverse-amortisation at the assessment rate = contract rate + 3.00 percentage points.
- DTI cap. Six times gross annual income.
| Step | Base profile ($95,000 income) |
|---|---|
| Assessment rate | 6.2% + 3.00% = 9.20% p.a. |
| Credit-card hit | 3% × $20,000 = $600/month |
| Borrowing power (rounded down to $1,000) | $268,000 |
2. Time to a 20% deposit
Your current savings grow each month at an assumed high-interest savings rate (RBA cash rate 4.10% + 1%, applied monthly), with your monthly contribution added. In parallel the target price grows at an illustrative 7%/year. The simulator counts the months until the balance covers a 20% deposit plus estimated closing costs — so it is chasing a moving target, which is why saving faster helps twice over.
3. Cash needed at settlement
For a 20% deposit this is deposit + stamp duty + fixed fees. The examples use NSW transfer duty (schedule effective 1 July 2025) for a standard, non-first-home buyer, plus fixed placeholder costs of $6,700 (conveyancing, building & pest, loan establishment, council rates adjustment, moving and registration). At a 20% deposit there is no LMI because the loan-to-value ratio sits at exactly 80%.
What the model leaves out
It assumes a constant rate over the horizon, no LMI at 80% LVR, indicative HEM, and NSW duty only. Buffers, the DTI cap and HEM are real prudential settings; the specific rates are assumptions. Confirm everything with your lender and a conveyancer.
Worked example: a $95,000 single buyer in NSW
Base profile — income $95,000, credit-card limit $20,000, declared living expenses $3,000/month, current savings $50,000, saving $2,000/month, target price $800,000, NSW, contract rate 6.2% p.a. (all illustrative).
Base results: borrowing power $268,000, time to a 20% deposit 97 months, cash at settlement $197,435.
Now flip one lever at a time:
| Scenario | Borrowing power | Time to 20% deposit | Cash at settlement |
|---|---|---|---|
| Base | $268,000 | 97 months | $197,435 |
| Clear the $20,000 card | $341,000 (+$73,000) | 97 months | $197,435 |
| Add partner income $70,000 | $494,000 (+$226,000) | 97 months | $197,435 |
| Save +$500/month | $268,000 | 72 months (-25 months) | $197,435 |
| Buy $100,000 cheaper | $268,000 | 76 months (-21 months) | $172,935 ($-24,500) |
What the table teaches:
- Cancelling the unused card is the cheapest win. Borrowing power rises from $268,000 to $341,000 — an extra $73,000 — because the lender stops subtracting $600/month from your surplus. It costs nothing.
- A second income is transformational. Adding $70,000 lifts capacity by $226,000 to $494,000 — far more than the other levers — because both the surplus and the 6× DTI ceiling rise together.
- Saving more shortens the wait but not the loan. An extra $500/month brings the deposit timeline from 97 months forward to 72 months — 25 months sooner — while borrowing power is unchanged.
- A cheaper suburb wins twice. Dropping the target by $100,000 cuts settlement cash by $24,500 (smaller deposit + lower stamp duty) and reaches a 20% deposit 21 months sooner.
Run the simulator with your own numbers, then take the most promising lever to a broker to confirm it against current lending policy.
Frequently asked questions
Does paying off a credit card really increase how much I can borrow?
Yes, and often by a surprising amount. Lenders count 3% of your total credit-card limit per month as a debt obligation, even if the balance is zero. In the worked example, cancelling a $20,000 limit removes $600/month from the expense side and lifts borrowing power from $268,000 to $341,000 — an extra $73,000. Reducing or closing limits before you apply is one of the cheapest ways to free up capacity.
How much does adding a partner’s income change my borrowing power?
It is usually the single biggest lever. Adding a partner earning $70,000 to a $95,000 base raises capacity by $226,000, from $268,000 to $494,000 in the example. Both ceilings move up together: the monthly surplus grows, and the 6× debt-to-income cap rises with combined income. The exact figure depends on the partner's own debts and expenses, so model their real numbers.
What is the APRA serviceability buffer and why does it matter?
APRA requires lenders to test whether you could still repay if rates rose. They assess your repayments at your contract rate plus a buffer of 3.00 percentage points. In the example, a 6.2% contract rate is assessed at 9.20%. The buffer is why your assessed capacity is lower than what the headline rate alone would suggest — it is a stress test built into every application.
What does the 6× debt-to-income (DTI) cap mean for me?
It caps most new lending at roughly six times gross annual income. On a $95,000 income that ceiling is about $570,000. Your actual limit is the lower of this DTI cap and your income-surplus capacity — whichever binds first. Lifting income (e.g. a partner) raises the DTI ceiling; cutting expenses or card limits raises the surplus side. The simulator shows which one is holding you back.
How long will it take me to save a 20% deposit?
In the base example — $50,000 saved, $2,000/month, $800,000 target — it takes 97 months. Saving an extra $500/month brings it forward to 72 months (25 months sooner). The projection assumes savings grow at the RBA cash rate (4.10%) + 1% while the price grows 7%/year — both illustrative — so you are chasing a moving target. Re-run it with your real savings rate.
Why does buying a cheaper home help twice?
Because a lower price reduces both the deposit and the stamp duty. Dropping the target by $100,000 cuts cash at settlement by $24,500 (from $197,435 to $172,935) and brings the 20% deposit timeline forward by 21 months. A smaller target is the fastest route to settlement when your savings are the bottleneck rather than your income.
Are the interest rates and price growth in this tool real forecasts?
No. The contract rate (6.2% p.a.), the RBA cash rate behind the savings projection (4.10%) and the 7%/year price growth are illustrative assumptions chosen so the math is easy to verify — not predictions. The APRA buffer (3.00 percentage points) and 6× DTI cap are real prudential settings, and NSW stamp duty uses the schedule effective 1 July 2025. Always confirm current rates and policy with your lender and a conveyancer.