Why borrowing capacity isn’t the same as affordability

Borrowing capacity answers one question: what a bank might lend you today.

Affordability answers a different one: what your life can comfortably carry over time.

Confusing the two is how people end up asset-rich but lifestyle-poor.

From a modelling perspective, borrowing capacity is calculated using benchmark expenses, buffers, and lending assumptions. It’s conservative — but it’s not personal.

Affordability, on the other hand, is personal by definition. It depends on actual living costs, lifestyle expectations, income variability, future plans, and risk tolerance.

Someone can be “approved” and still be overcommitted.

This is why strategy-led investing starts with surplus modelling, not borrowing limits — because surplus is what protects lifestyle, not approvals. Surplus reveals whether a decision improves resilience or quietly erodes it.

In practice, many strong decisions involve borrowing less than what’s available. The goal isn’t maximum leverage. It’s longevity.

Approval tells you what’s possible.
Surplus tells you what’s sustainable.

Before making any investment decision, understand what your lifestyle can actually sustain.

→ Model Your Decision