Serviceability
Serviceability is the overarching test a lender applies to determine whether you can comfortably afford a mortgage. It is not simply about whether you earn enough, it considers your full financial picture: your income (and how the bank categorises it), your existing debts, your regular living expenses, your deposit size, and your ability to keep up repayments if interest rates were to rise materially above their current level.
Each lender runs its own version of this assessment using its own criteria and models, which is one reason why two banks can give meaningfully different answers to the same borrower. A serviceability assessment generally tests your repayments at a higher rate than the one you will actually pay, to ensure there is a buffer for rate increases. If your repayments under that higher test rate consume too large a share of your income, or if your total debts exceed certain multiples of your income, the loan may be declined.
Think of serviceability as the combined picture the bank is trying to build: can this borrower sustain this loan over the life of the mortgage, through rate changes, income shifts, and unexpected costs? The more comfortable that picture looks, the more likely an approval, and potentially a better rate.
A strong serviceability position is the single most important factor in whether a lender will approve your application, and at what rate. Improving your serviceability generally means reducing existing debts, increasing your deposit, or demonstrating stable income over time. Lenders look favourably on borrowers who present a clean, well-documented financial picture.
See how this affects your numbers
Run the mortgage calculator to see how serviceability plays out in your specific situation.