Melbourne's best mortgage broker explains how to maximise your borrowing capacity.
Do you know? How to increase borrowing capacity? If you’re worried about how the recent increase in interest rates will affect your plans to secure a home loan, know that you’re not alone. As Melbourne’s leading home loan broker, What If We Finance is here to help. We’ve compiled a comprehensive guide with tips to help you navigate this situation and get the best deal possible.
1. Manage Your Credit-Card Limits.
When you apply for a home loan, banks assess your credit card limits to indicate how much debt you may take on. To minimise this risk, consider reducing or closing any credit cards with high limits that you’re not actively using
2. Clear Other Liabilities.
If you have other debts, such as student loans or ‘buy now, pay later’ arrangements, paying them off before applying for a home loan is advisable. This can improve your borrowing power and reduce the perceived risk you represent to lenders.
3. Find Extra Income Sources.
Consider ways to boost your income, such as taking on a part-time job, negotiating a salary increase, or receiving family support. Additional income can increase your financial flexibility, make it easier to meet unexpected expenses and improve your ability to borrow.
4. Embrace Principal And Interest (P and I) Repayments.
Opting for a P and I repayment structure can increase your borrowing power by making qualifying for a larger loan easier. Additionally, this repayment option typically carries lower interest rates. However, it’s essential to consider the long-term implications of this decision and how it aligns with your investment strategy.
5. Explore Non-Standard Lenders.
While traditional lenders may be more rigid in their lending requirements, non-standard lenders can offer more flexibility and expanded options. However, remember that these loans often carry higher interest rates and require careful consideration before committing.
6. Ownership With A Partner.
7. Budget and manage your lifestyle
Finally, living within your means and minimising unnecessary spending can positively impact your financial situation and make you a more attractive candidate for lenders. Following these tips, you can maximise your borrowing power and secure the home loan that best fits your needs.
What If We Finance, since 2008, has been helping consumers buy their homes. We take the stress out of finance, and contact us today to find out why we are Melbourne’s best mortgage broker. Locate us here.
