Serviceability

Serviceability is the lender's assessment of whether you can comfortably afford a loan, run as a worst-case test rather than a current-rate test. APRA mandates lenders assess at the higher of the customer rate plus a 3% buffer or the lender's floor rate - so a loan offered at 6.5% is typically assessed around 9.5%. Lenders also shade rental income (usually to 80% to allow for vacancy and management fees), add a notional repayment on credit card limits even if the cards are paid off, and apply a HEM (Household Expenditure Measure) for living costs. Investors hit serviceability ceilings far earlier than they expect, especially in a multi-property portfolio.