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Tips to increase your borrowing capacity

With interest rates at an all-time low, coupled with low inflation and relatively low unemployment rates – more and more Australians are taking up home loans to fund their property purchase.
 
However as global economic conditions remain delicate and Australian banks are required to hold more capital against their mortgage portfolios – lenders are becoming increasingly thorough when scrutinizing an application.

With this in mind, we have outlined some simple tips to help you maximise your borrowing power.

 

Cutback your credit

If you own three credit cards with a limit of $20,000 each, the lender will view this as a potential debt of $60,000, significantly reducing your borrowing capacity.

Reducing your available credit will not only save you on fees and high interest rates, but help to increase your borrowing capacity as well.

 

Healthy credit history

Maintaining a clean credit history is also an effective way of increasing your borrowing capacity considerably. By paying even the most inconspicuous bills on time, you’re viewed as a responsible borrower in the eyes of a potential lender.

For more information on your credit history visit: http://www.veda.com.au/

 

Consolidate your debts

By consolidating all your outstanding debts into single loan, it allows you to streamline your payments, helps with budgeting and allows you to refinance at a better rate – all positives in the eyes of a potential lender.

 

Financial Records

By complementing your application with proofs of any bonuses or overtime you regularly receive, rental and other income from investments you can significantly improve the assessment of your financial position by a prospective lender.

 

Savings

Most lenders require record of genuine savings over a period of at least three months before they approve your loan. Furthermore, having a deposit of at least 20% means you avoid paying Lenders Mortgage Insurance.
 
Taking advantage of the First Home Owners Grant offered by many States can further boost your savings as it will supplement the amount you pay upfront for the house, while additional stamp duty concessions are also available for first home-buyers.  

If you would like to learn more about your borrowing capacity, or are interested in obtaining a loan, get in touch with one of our ChapterTwo representatives for a free consultation.

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