Which of the following factors does a lender look at when assessing the MAXIMUM loan it is prepared to offer an individual borrower? (i) Profit the loan will generate. (ii) Borrower's loan to income limit. (iii) Loan to Value ratio.

• A. (ii) and (iii) only.
• B. (i) and (ii) only.
• C. (i) and (iii) only.
• D. (i), (ii) and (iii).

Answer: (D)

The maximum amount a lender is willing to offer is shaped by how the loan will perform for the lender in terms of risk and return, whether the borrower can actually repay, and whether the collateral supports that amount. First, profit the loan will generate reflects the lender’s target return after costs and risk; if pricing and risk allow, they can offer more, but only if other checks permit. Second, the borrower’s loan-to-income limit is about serviceability—if the borrower’s income and existing obligations don’t support larger repayments, the lender caps the loan size accordingly. Third, the loan-to-value ratio compares the loan to the collateral’s value; a higher LVR means more risk to the lender and often requires additional safeguards, which can reduce the maximum loan. Together, these factors determine the ceiling: all three can constrain how much is offered, so the maximum loan takes into account profitability, affordability, and collateral value.