Navigating the borrowing process with Australian banks as an expat can feel overwhelming, especially when policies and global financial conditions keep evolving. Whether you’re looking to invest in property, refinance, or fund a big purchase, your borrowing capacity plays a crucial role.

The good news is there are practical strategies you can use to maximise what you can borrow. These eight tips are designed with the 2025 lending landscape in mind, giving you a clear path to success.

What is Borrowing Capacity, and Why Does It Matter?

Borrowing capacity refers to the maximum amount a lender will allow you to borrow, based on your income, expenses, assets, and liabilities. For Australian expats, this can be trickier to navigate, as lenders assess factors like your overseas income, tax obligations, and credit history differently.

Boosting your borrowing capacity can open doors to better investment opportunities, help you purchase your dream property, or even give you more leverage to negotiate loan terms. Let’s dive into actionable ways to achieve this.

#1 - Reduce Your Credit Card Limits

One of the most overlooked factors affecting borrowing capacity is your total credit card limit—not just the balance you owe. Even if you pay off your credit card every month, lenders calculate a portion of your limit as part of your monthly expenses.

By reducing or cancelling unused credit card limits, you instantly free up your borrowing power. For example, lowering a $20,000 credit limit to $5,000 can significantly increase how much you can borrow. Remember, it’s not about how much you owe but how much you could owe if you max out your cards. Every $1,000 reduction in your credit limit could boost your borrowing power by as much as $6,000 – this one adds up quickly.

#2 - Pay Off Your HECS Student Loans

HECS debt, while interest-free, directly reduces your borrowing capacity. Many expats don’t realise this debt is considered a liability by Australian lenders, even if it feels like it’s "out of sight, out of mind."

Clearing your HECS debt can give your finances a clean slate, improving how much you’re eligible to borrow. If you’ve got extra funds saved or you’re in a position to repay it fully, consider knocking it off your balance sheet. Even a small HECS loan outstanding will significantly impact your borrowing power, as the liability is based on your income, not the outstanding loan amount.

#3 - Extend the Terms of Existing Loans

If you have existing loans, such as mortgages, personal or car loans, extending the loan term can lower your monthly repayments. While this increases the total interest you’ll pay over time, it frees up immediate cash flow, which lenders see as improved borrowing capacity as your monthly out of pocket expenses are lower.

For example, extending a car loan from three years to five years reduces your monthly repayment burden, even though you’ll pay more interest in the long run. It’s about striking the right balance between short-term goals and long-term costs.

#4 - Find a Lender That Recognises Net Income in Low-Tax Countries

As an expat, your income might be taxed at a lower rate if you live and work in a country with favourable tax laws. Some Australian lenders take this into account, focusing on your net income (what you take home after tax) rather than gross income. For example, if you’re living in Singapore, Hong Kong or Dubai where tax rates are significantly lower, this can see a significant boost to your borrowing power.

Not all lenders are equal in this regard. Research banks or brokers that specialise in expat lending or have policies designed for those earning in foreign currencies. Finding the right lender can make a significant difference in your borrowing capacity.

#5 - Invest in Higher-Yielding Locations

If you’re borrowing to invest in property, focus on areas with higher rental yields. This improves your cash flow, which Australian banks consider when assessing borrowing capacity. High-yielding locations generate more income relative to the property price, demonstrating to lenders that your investments are self-sustaining.

Cities with growing populations, strong job markets, and infrastructure development often present great opportunities. Research trends and data to target these areas effectively.

#6 - Time Borrowing with Favourable Exchange Rates

Exchange rates can work for or against you, depending on when you decide to borrow. If you earn in a foreign currency, a favourable exchange rate means your income converts to more Australian dollars, improving your borrowing position. Consider the current exchange rates, with the Singapore dollar at approximately A$1.18 – this could be an opportune time for many Australian expats considering investing back home to take action.

Keep an eye on currency trends and consult with a financial expert to lock in loans when rates are in your favour. Timing this correctly could add thousands of dollars to your borrowing potential.

#7 - Consolidate Debts Strategically

Juggling multiple debts can make your finances appear stretched to lenders. Consolidating debts into one facility—preferably at a lower interest rate—simplifies your financial profile and lowers monthly repayments.

For example, combining a personal loan, credit card debt, and car loan into one facility can reduce overall repayments, showing lenders you have more capacity to manage a home loan.

#8 - Review and Optimise Your Savings Practices

Your savings history reflects your financial discipline, which lenders take seriously. Regular, consistent savings—even while living abroad—demonstrate stability. Aim to reduce unnecessary expenses and maintain a clear savings goal.

Having a solid deposit or emergency fund not only boosts confidence in your application but also gives you a cushion when managing loan repayments. It may also mean that you can contribute a larger deposit, which may reduce the interest rate that the lender imposes and therefore boosts your borrowing power.

Additional Tips to Consider

Avoid major purchases with finance like cars or luxury goods before applying for a loan, as these affect your debt-to-income ratio.
Maintain a stable employment history to reassure lenders of your financial reliability.

Work with a mortgage broker experienced in expat lending to identify tailored solutions.

FAQs

How does reducing credit card limits help boost borrowing capacity?
Reducing credit card limits lowers your potential liabilities, making your monthly expenses appear smaller to lenders, thus increasing your borrowing power.

Why does HECS debt affect borrowing capacity?
Even though HECS loans are interest-free, lenders see them as a liability. Repaying them fully reduces your overall debt burden.

Are there risks in extending loan terms?
Yes, while extending loan terms reduces monthly repayments, it increases total interest paid over time. This trade-off needs careful consideration.

Which lenders consider net income for expats?
Certain Australian banks specialise in expat lending and consider net income for those in low-tax jurisdictions. Working with an expat-focused broker can help identify them.

What are higher-yielding investment locations?
These are areas with strong rental demand and good rental returns compared to property prices, often found in growing cities or regional hubs.

How do exchange rates impact borrowing capacity?
Favourable exchange rates increase the Australian dollar equivalent of your foreign income, improving how much you can borrow.

Conclusion

Boosting your borrowing capacity as an Australian expat requires strategic planning and a clear understanding of how lenders assess your financial situation. By reducing credit limits, paying off HECS debt, choosing the right lender, and timing your borrowing decisions wisely, you can maximize your opportunities in 2025’s competitive lending environment.

Take action today—evaluate your finances, consult with experts, and set yourself up for financial success.

Ally Home Loans Pty Ltd is your ally in finance for all of your home loan, investment property, business and commercial financing needs. With our wide range of lending solutions, expertise in financial planning and investment strategies, and extensive experience in working with both Australian residents and Australian expats, we are your partners for your lending needs.

Book an obligation-free, complimentary consultation here today.

Ally Home Loans Pty Ltd is an Authorised Credit Representative (Credit Representative Number – 494608) of My Local Broker (Australian Credit License – 481374). Important Disclaimer: Your complete financial situation will need to be assessed before acceptance of any proposal or product.