Liabilities explained
A simple guide for first home buyers, refinancing & property investors in Hervey Bay.
When people think about getting a home loan, they usually focus on income, deposit, and interest rates.
But behind the scenes?
Liabilities are one of the biggest factors shaping your borrowing power.
If you don’t understand them, they can quietly limit your options.
If you do understand them, you can use them strategically to get ahead.
What is a Liability?
A liability is anything you owe.
Sounds simple — but lenders look at this very closely when deciding how much they’re willing to lend you.
Common liabilities include:
* Credit cards (even if you don’t use them)
* Personal loans (cars, holidays, Afterpay-style debt)
* HECS/HELP debt
* Existing home loans
* Buy Now Pay Later accounts
* Guarantor loans
* Business loans (in some cases)
Important: It’s not just the balance — it’s the repayments and limits that matter.
Why Liabilities Matter
Lenders don’t just ask:
“Can you afford this loan?”
They ask:
“Can you afford this loan on top of everything else you owe?”
This is where things like your Debt-to-Income ratio (DTI) and serviceability come into play.
Higher liabilities = lower borrowing power
Lower liabilities = more flexibility and options
Liabilities for First Home Buyers
Buying your first home in Hervey bay? This is where small things can have a big impact.
What to watch:
1. Credit card limits
Even if your card is paid off, lenders assess it at the full limit.
A $10,000 limit can reduce borrowing power more than you expect.
2. Buy Now Pay Later
Those small repayments add up — and lenders don’t love them.
3. Car loans & personal loans
These directly reduce how much you can borrow for your home.
Simple strategy:
Before applying for a loan:
* Reduce or close unused credit cards
* Pay down small debts where possible
* Avoid taking on new finance
Small changes here can mean tens of thousands more in borrowing power.
Liabilities When Refinancing
Refinancing isn’t just about getting a better rate — it’s a chance to reset your financial position.
What to consider:
1. Have your liabilities increased since you first applied?
New debts can impact your ability to refinance.
2. Are you consolidating debt?
Rolling personal loans or credit cards into your mortgage can improve cash flow — but needs to be done strategically.
3. Credit behaviour matters
Lenders will look at repayment history across all liabilities.
Simple strategy:
* Review all debts before refinancing
* Avoid adding new liabilities right before applying
* Get advice on whether consolidating debt helps or hurts long term
Liabilities for Property Investors
This is where liabilities become more complex — and more important.
Key things lenders look at:
1. Debt-to-Income Ratio (DTI)
This compares your total debt to your income.
Higher DTI = higher risk in the lender’s eyes.
2. Existing property loans
Each loan you take on reduces your capacity for the next one.
3. Rental income (shaded)
Most lenders only use 70–80% of rental income to allow for:
* Vacancies
* Expenses
* Market risk
So your investment property may not boost your borrowing as much as you think.
4. Guarantor loans
If you’re a guarantor (or used one), that liability can still be counted.
Simple strategy:
* Plan your purchases, don’t just react
* Structure loans correctly from the start
* Work with a broker who understands long-term investing
The goal isn’t just buying one property — it’s keeping the ability to buy the next one.
The Big Picture
Liabilities aren’t “bad” — they’re just part of your financial story.
But here’s the truth most people don’t realise:
Two people with the same income can have completely different borrowing power… purely based on their liabilities.
Final Thoughts
Whether you’re:
* Buying your first home
* Refinancing for a better deal
* Building a property portfolio
Understanding your liabilities puts you back in control.
Because once you know how lenders see your finances, you can start making moves that actually support your long-term goals. If you would like to speak to a broker today, contact us here.