Virtually all banks and lenders use different formulas to work out your capacity to borrow and some are far more lenient than others.  As an example a single father earning $64,000 per year that has 2 children can borrow approximately $287,000 with St George Bank.  The same person can borrow approximately $335,000 through ING Bank.

So why would 2 banks with very similar interest rates have such a huge difference in the amount they are prepared to lend a potential customer?  The answer in short is the banks internal credit policies.  Different banks have different guidelines that they must conform to when lending out money.  These guidelines are generally decided on by executives of the bank and account for how much risk a bank is prepared to expose itself to when lending money.  Some banks are more risk adverse in certain areas than others and this is why variances occur in the amount they will lend. 

In the above example our single father can borrow a further $48,000 through ING Bank by fixing his loan for 4 years.  ING are one of the most lenient of lenders when it comes to borrowing capacity on a 4+ year fixed rate loan.  The reason for this is because they do not load the interest rate when calculating your borrowing capacity on a 4 year fixed rate loan.

What we mean by this is that most lenders place a loading on top of your actual interest rate when calculating your capacity to borrow.  This loading is to make sure that you can continue to pay your loan if interest rates increase.  Because ING do not use any loading your ability to borrow is dramatically increased.