How Do Pay Rises and Promotions Affect Your Borrowing Capacity?

A recent pay rise or promotion can increase your borrowing capacity, but the timing of when it takes effect plays a major role in how lenders assess it. If your promotion is six months away but you're applying for approval now, the bank will generally only consider your current income.

If the promotion is closer, for example one month away with settlement three months out, it's possible to secure conditional or formal approval. The lender will typically want to see your first payslip reflecting the new income before finalising things, confirming that the increase has officially taken effect.

The type of promotion also matters. A permanent, ongoing increase to your salary can be used to boost your servicing capacity. However, if the role is a secondment or a temporary arrangement where you'll return to your previous position, that income generally cannot be relied on. Speaking with your broker early helps clarify how your specific situation will be treated by lenders.