Strategy · May 2026 · 9 min read
We regularly see buyers lose $50,000 to $150,000 in borrowing power because of small financial decisions they didn't realise banks cared about. Here are the most common ones.
Most Australians assume getting approved for a home loan is mainly about earning a good income.
But in reality, we regularly see buyers lose anywhere from $50,000 to $150,000 in borrowing power because of small financial decisions they didn't realise the banks cared about.
The frustrating part is that many of these mistakes are completely avoidable when you understand how lenders actually assess a mortgage application.
At Vairo Group, a huge part of our role is helping clients identify these hidden issues before they apply for a home loan, not after they've already been declined or forced to lower their budget.
Here are 10 of the most common borrowing power mistakes we see across Australia.
One of the biggest surprises for first home buyers is that banks assess your credit card limit, not just what you owe.
Even if your balance is sitting at $0, lenders still treat the limit as a potential debt.
For example:
Many buyers keep unused cards for emergencies or rewards points without realising they may be hurting their home loan application.
This is one of the most common mistakes we see with younger Australians.
Someone spends years saving a deposit, then finances a new car six months before applying for a mortgage.
That monthly repayment can dramatically reduce borrowing power.
Even a relatively modest car loan repayment can reduce home loan borrowing capacity by tens of thousands of dollars depending on the lender and overall position.
For many buyers, the car ends up costing them more than they expected, not because of the car itself, but because of the property opportunities it limits.
Many people assume Buy Now Pay Later accounts like Afterpay, Zip Co and Klarna don't matter because the repayments are small.
But lenders increasingly scrutinise BNPL usage.
In some cases, these accounts can:
Even when the impact is minor individually, multiple accounts can become a red flag during assessment.
Every finance application leaves a footprint on your credit file.
When lenders see multiple recent enquiries, it can sometimes create concern that the borrower is under financial pressure or aggressively seeking debt.
This includes:
A cleaner credit file often creates a stronger mortgage application.
A new job with higher income might seem like a positive move, and long term, it often is.
But from a lender's perspective, changing employment close to application time can sometimes create uncertainty.
Some lenders:
This doesn't mean changing jobs is always a problem, but timing matters more than most buyers realise.
Online borrowing calculators can be useful as a rough guide, but many Australians rely on them far too heavily.
The reality is every lender assesses borrowing capacity differently.
Things that can dramatically change your borrowing power include:
We regularly see buyers shocked by how different their actual approval amount is compared to online estimates. Our borrowing power calculator is just a guide and can give you a great idea on where your situation can get you, but lending policy can completely change how banks see your application.
A lot of borrowers assume: “I’ve banked with them forever, so they’ll look after me.”
Sometimes they do.
But many buyers never realise another lender may offer better borrowing capacity, lower rates, reduced fees, or more flexible policies.
Different lenders assess income, expenses, and liabilities very differently. A loan that gets declined at one bank may be approved elsewhere with the right structure.
Many Australians unknowingly pay what's often called the mortgage loyalty tax.
Banks regularly offer sharper rates to new customers while long-term borrowers remain on older, less competitive pricing.
Even a small difference in interest rate can potentially cost thousands over time.
Reviewing your mortgage regularly can help identify opportunities to:
A lot of people only speak to a mortgage broker once they've already signed a contract.
By that stage, options can become more limited.
Speaking with a broker early can help buyers understand:
The earlier the strategy is built, the more flexibility buyers usually have. See how we work with buyers at Vairo.
This is probably the biggest misconception of all.
Two people earning the same salary can have completely different borrowing capacities depending on: debt levels, spending habits, loan structure, dependants, credit history, and lender selection.
Getting approved for a mortgage is rarely just about how much you earn.
It's about how the overall financial story looks to the lender.
Most borrowing power mistakes are not dramatic financial disasters.
They're usually small decisions people make without understanding how lenders assess risk.
The good news is many of these issues can be improved or avoided entirely with proper planning and advice.
At Vairo Group, we help Australians understand their position before they apply so they can make informed decisions, avoid costly mistakes, and structure their lending strategy properly from the beginning. Get in touch with a Vairo broker today.
Because in today's market, improving borrowing power is often less about earning more, and more about avoiding the mistakes that quietly reduce it.
The information in this article is general in nature and does not take into account your personal circumstances. Speak with a qualified mortgage broker before making lending decisions.
