How much debt is TOO much debt?

Hi All,

Seeking opinions/experiences on knowing what debt you are comfortable with.

My partner and I are in the process of buying a property together - I’ve owned before and they haven’t. We’re discussing at the moment what our budget is to buy. A few key points below:

• We have about 400k in cash but would like some of this left over as a back up. We also have investments on top of this of say 50k
• after tax pay of of $7,600pf, an about $10k before tax
• no debt aside from credit cards that barely get used, will close in need
• Current rent of $900pw
• we can go up to 95% LVR without LMI
• no kids, probably wont
• Ages - Early 30’s

We have a pre-approval for a loan of $1.3m, but I would like to have a loan amount of up to maybe $1.15m, but my partner thinks this is way too much and unaffordable.

A loan of $1.15m (not allowing for say $100k in redraw) is $3k pf is about 40% of our income, and the total debt is about 4x total income which in bank terms are reasonable. I seem to read a lot that you shouldn’t have more than 30% of your income going towards debt, and banks prefer income to debt of 6x (whilst not a hurdle, something that is considered in addition to normal servicing calculations).

My question is are these “metrics” for serviceability relevant? What’s your experience with how much debt you have and is/was it manageable? Am i being too fearless with what i think we can afford?