Play with the two gates

What you're playing with

Every home loan has to get through two gates. Gate one is the money: your cash has to cover the deposit and the costs of buying. Gate two is the loan: what's left of your income has to cover the repayments, tested at a higher rate than you'll pay. Each gate sets a ceiling on price, and you stop at whichever one is lower.

Savings

Each coin lifts the cash ceiling a long way, because it covers a deposit on a much bigger price. When the loan side is the limit, the same coin only adds about its own value to the price.

Income

More income lifts the loan ceiling and nothing else. It can't fix a shortfall on the money side.

Living costs

Spending less lifts the loan ceiling, but only down to the bank's benchmark for a household like yours. Below that, the bank uses its benchmark anyway.

Other loans

Repayments on a car or personal loan take up room on the loan side. Paying one off uses savings, which lowers the cash ceiling, but when the loan side is the gate that's stuck it can do more than keeping that money for the deposit.

Card limit

Banks count a card's limit, not its balance, so an empty card still takes up room. A smaller limit counts for less, and closing it frees the lot.

Family help

A gift is money you don't have to borrow, so it lifts both ceilings. A guarantee stands in for some of the deposit, so gate one opens right up, but you still repay the whole loan, and part of your family's home becomes security for it.

The higher test rate

The switch that won't turn off is the bank's rule. It checks you could still make the repayments at a higher rate than you'll pay, which is why the dashed line sits above the loan ceiling.

The playground leaves out things like LMI, government schemes and the differences between lenders. The two gates explainer covers those, and the Borrowing Power Lab works with real numbers.