Lenders have progressively tightened their lending criteria over the last few years, making it just that little bit harder for home buyers to get into the market. This is why it’s important to leverage on the knowledge and experience of a mortgage broker.
Here are a few strategies to maximise your borrowing power:
1. THE RIGHT LENDER
Different lenders have different lending policies and servicing calculators. They also have a varying appetite for different income types/sources. We assess your situation and align you with a lender that is best suited to your circumstances thereby improving your ability to borrow what you need.
2. THE RIGHT PRODUCT
Product features such as P&I / I&O repayments, fixed and variable rates and rate discounts can have an impact on how much the lender will allow you to borrow. Features like principal and interest repayments and fixed rates will generally improve your borrowing capacity across lenders. We can help you choose the most suitable and competitive product.
3. REDUCE YOUR CREDIT CARD LIMIT
In the eyes of the lender, your credit card limit of $10,000 is considered as a potential loan of $10,000 on your hands even though you may not have spent the money. Therefore, reducing or cancelling your credit card will mitigate this liability and increase your borrowing power.
4. ROLL YOUR DEBTS INTO ONE
Having lots of debts like car loans, personal loans and multiple credit cards doesn’t present well with lenders. We help clients consolidate these debts into a single, easier to manage loan, to reduce and streamline repayments and thereby improving their borrowing capacity.
5. MAINTAIN A GOOD CREDIT HISTORY
Pay your bills on time – Keeping a clean credit history is important in showing potential lenders that you are a responsible borrower. It’s a good idea to check your credit file and address any red flags before applying for credit. Websites such as Equifax (formally Veda) can provide free reports.
6. KEEP YOUR FINANCIAL RECORDS UP TO DATE
You can borrow more and avoid unnecessary delays by having all the required paperwork ready. Make sure you retain payslips and payment summaries if you are PAYG. If you are self-employed, have your tax returns completed on time. The intention here is to accurately substantiate your annual income to the potential lender.
7. INCREASE YOUR INCOME, MINIMISE OUTGOINGS
Don’t be afraid to ask for a pay rise – A $10,000 increase in your annual salary can increase your borrowing capacity by $70,000.
Live frugally – Cut costs where possible. Reducing your living expenses will also greatly improve your serviceability for a bigger loan.
8. SAVE A BIGGER DEPOSIT / UTILISE EQUITY
The amount of savings you have and/or equity in an existing property can substantially improve your borrowing power. The larger the deposit you’ve saved, the more you can borrow and there’s a better chance we can negotiate a lower interest rate or get fees waived.
Talk to us today. We will assess your financial situation, discuss your next purchase and strategies you can implement to maximise your borrowing power.
For more information contact us at Your Future First on 03 9362 1458 or email andy@yourfuturefirst.com.au