Use this article to understand how the Borrowing Capacity Calculator works, what each field means, and how different inputs influence the result. This will help you model scenarios accurately and explain outcomes to your clients.
How the borrowing capacity is calculated
The Borrowing Capacity Calculator uses the following default assumptions:
Loan term of 360 months (30 years)
Principal and interest (P&I) repayments
All figures entered as gross amounts
Note: All results are estimates only and may differ from final lender assessments.
Total security, loan amount and LVR
The Total security, Loan amount, and Loan-to-value ratio (LVR) fields are directly linked.
When you add, remove, or adjust a value in any of these fields, the other fields will automatically update to reflect the change.
Tip: If a result looks unexpected, check whether one of the linked fields has auto-adjusted.
Households and dependants
The Borrowing Capacity Calculator allows you to indicate when applicants and their dependants live in different households.
This ensures living expenses are assessed correctly based on each household configuration.
Borrower income and the self-employed income wizard
When you select Self-employed as a borrower’s income type, the Self-employed (SE) Income Wizard becomes available.
Use the wizard to calculate two financial years of self-employed income, including:
Net profit before tax
Non-recurring expenses
Company loans
Director fees
Allowable add-backs
You can also distribute income across applicants and non-applicants as required.
Income policy matrix
Each income type includes an information icon.
Selecting this icon opens a panel showing the lender’s policy for that income type, helping you understand how the income will be assessed.
Suppressing income and expenses
You can temporarily include or exclude specific income or expense items when modelling scenarios.
Select the eye icon next to an income or expense field to enable or suppress it from the calculation.
This allows you to compare different scenarios in a single calculator tab, without opening multiple versions.
Tip: Use this feature to demonstrate the impact of changing income or expense assumptions to your client.
Assets and investment real estate
When you select an asset as Investment real estate, additional fields become available.
Key considerations include:
Investment costs are treated as living expenses
Investment costs are not mapped to the standard ‘investment property cost’ living expense
Frequency reflects how often investment costs occur
Negative gearing is apportioned based on the ownership percentage for both existing and proposed investment properties
Using assets as security and clearing loans
Select Use as security when an existing property is being included as security for the new application.
This may increase borrowing capacity, depending on the lender’s assessment.
When Use as security is selected:
The Clearing option is automatically selected and hidden
The calculator assumes a different lender and that the loan will be cleared
Important: Always confirm lender requirements before relying on increased borrowing capacity results.
Need help?
If you need help using the Borrowing Capacity Calculator in Mercury Nexus, contact your Partnership Manager or email [email protected].