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5 simple ways to increase your borrowing capacity?

The following is a few simple ways to increase your borrowing capacity.

1. Shop around for lenders Each lender has their way to define what income can use for servicing and also the way they calculate the income and liabilities. For example, some lenders only use 80% of bonus income while other lenders able to use up to 100% of bonus income. Due to the way the lender calculates the servicing, one lender might lend you $50k - $100k more than the other lender.

2. Consolidate your unsecured debts into your mortgage Unsecured debt such as personal loan, car finance & credit card debt usually has high repayment compare to mortgage repayment. Consolidate your unsecured debt into your mortgage not only help you lower your monthly repayment, but it also allows you to increase your mortgage borrowing capacity.

3. Reduce credit card limits Reduce your credit card limit can raise your borrowing capacity. In the eyes of a lender, the higher your credit card limit, the more chance you have to get into financial difficulty. So, if you want a simple way to increase your borrowing limit, get rid of any surplus cards, and reduce your credit card limit to the absolute minimum you need.

4. Take a long term loan Compare a mortgage loan term of 40 years and 30 years. The 40 years loan term allows you to borrow up to $50k - $100k more amount than 30 years loan term with the roughly same repayment per month, it all due to the 40 years loan term has spread the loan amount into 40 years instead of 30 years. Be aware of the longest the life of the loan, the more interest you might have to pay. One of the good things is you don't have to take 40 years to pay off the loan. You can pay it off in 15-20 years.

5. Save more for the deposit Some lenders can lend up to 95% LVR of the property to borrower purchase their owner-occupied property. Before they lend up to the money to you, they wanted to see you can come up with at least 5% of the genuine savings. It can be any money you save for last three months period and also the previous 6 months of rent payment history.

Want to find out your mortgage maximum borrowing capacity? Give Kevin Poh a call today on 0415820016. He can assist you to discover what is your maximum borrowing capacity or for any mortgage loan advice.

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