If Chapter 6 explained what to buy, Chapter 7 explains what you can actually afford to buy… 

And why most Australians misunderstand borrowing power completely. 

As the official podcast companion to How to Retire on $3K a Week, this episode goes deeper into the thinking, context and real-life examples behind the book’s Borrowing Power chapter. 

Inside, Bryce and Ben unpack: 

💳 What borrowing power really means (hint: it’s not your income)
📉 Why your borrowing power rises and falls depending on RBA movements
🏦 How lenders actually assess you and why every bank is different
🧮 Why your borrowing capacity and your purchase capacity are NOT the same thing
🎯 How to safely align your borrowing power with your long-term investment plan
📌 The Five Finance Rules and how they protect you from overstretching 

Plus: Bryce shares a story about the first time he realised borrowing power isn’t about maximising debt; it’s about maximising safety and strategy. 

If you’ve ever felt confused, frustrated or blindsided by what the bank says you can borrow… this chapter will make the whole system finally click. 

 

P.S. Want the full wealth framework in one place?
Grab your copy of How to Retire on $3K a Week now! 👉 howtoretireon3k.com.au 

Timestamps

  • 0:00 – Chapter 7: Understanding Borrowing Power   
  • 0:40 – Why borrowing power isn’t about income   
  • 1:15 – How interest rates shape your borrowing capacity   
  • 1:50 – Lenders all assess you differently — here’s why   
  • 2:32 – Borrowing capacity vs purchase capacity   
  • 3:05 – The 5 Finance Rules (and how they protect you)   
  • 3:45 – Why stretching yourself breaks the investment formula   
  • 4:20 – Borrowing power as a strategic advantage   
  • 5:00 – What to do BEFORE talking to a bank   

Transcript

Bryce
All right, folks — welcome back to the How to Retire on $3,000 Per Week podcast. I’m here with Ben, and today we’re chatting about Chapter Seven: Borrowing Power. Now Ben, anyone who knows us knows we’ve said this a thousand times — to the point where even we might be getting a bit sick of hearing it — but property is a game of finance just as much as it’s a game of bricks and mortar. And the chess analogy? We’ve rolled that out a few times, but it’s so powerful. You don’t win chess in one move; you win it two or three moves ahead. And it’s exactly the same with property investing.

Ben
Yes because at the end of the day, the power of leverage allows you to control a bigger asset, like we talked about in return on invested capital or cash-on-cash return. It’s such an important part of investing in property. It’s unavoidable. When we wrote this chapter, we wanted to make sure we didn’t miss all the nuances:

  • offset accounts
  • avoiding cross-securitisation
  • loan-to-value ratios
  • the mechanics of borrowing
  • But borrowing also bleeds into cashflow management and optimisation.

If we do borrowing well — without overextending — we avoid what we’ve seen too often: people get in front of their skis, fall over, wipe out… and wipe out their portfolio because they got greedy. Leverage is a wonderful servant and a terrible master.

Bryce
Exactly. And we introduced a concept in this chapter that I’m really proud of because it helps change the narrative around debt. You and I are 70s vintage —

(laughter in the background)

— and we grew up in an era where all debt was bad. Our grandparents believed it. Our parents were transitioning. And as Gen Xers, we were the first to really challenge that thinking.

So it morphed into good debt vs bad debt. But we’ve taken it a step further: Horrible, Tolerable and Productive debt. And the kids-in-the-playground story really brings it to life — same amount of debt, but one was wealthy and one wasn’t, purely because of the type of debt.

Ben
Yes, and another big reminder in this chapter is this: Access to borrowings — sensible borrowings — often trumps interest rate. If I have to pay a little more interest but I can still secure the asset that aligns with my long-term plan, then my returns will outperform over time. Too many people get stuck on the cost of debt instead of the opportunity debt gives them.

This isn’t a comprehensive lending playbook, but we included the fundamentals — the language of lending — because if you don’t know what LMI, LVR, buffers, P&I vs IO mean, you’re investing blind. These terms should roll off your tongue. We also put diagrams in the book showing good vs bad structure. If you want to be a serious student of the investing game, you need to know this chapter inside out.

Bryce
Yes — and that’s why we tell people to make sure they’re working with an investment-savvy broker. When they start using the language of the game, you want to understand what they’re saying. We packed a lot into this chapter — clear explanations, no waffle — just what you need to know. We really should’ve put “WAFFLE FREE” on the first page.

(both laugh)

But seriously: this chapter takes you from beginner to intermediate investor. Study the diagrams. Understand the structure. Learn how to tell your banker how you want your lending structured — not the other way around. If you don’t stay in control of your debt… the snowball effect can get you.

Ben
Perfectly said, mate.

Bryce
So there you go, folks. If you’re playing along at home, hopefully you have your copy of How to Retire on $3,000 Per Week — maybe the audiobook, the Kindle, or the hardcopy. If not, head to howtoretireon3k.com.au to grab one.

We’re really starting to hit our straps here on the property investment formula.

We’ve covered the A,
We’ve covered the B,
And next, we move to the C.

And honestly? We could make a case that C should’ve been first — but we’ll explain in the next chapter why it isn’t. In reality, it’s the actions and behaviours in this next stage that set everything else up. So stick around as we head into Chapter Eight: Cashflow Management.