With many lenders credit policies remaining tight maximising your borrowing capacity can mean the difference between realising an opportunity or missing out. Here are ten simple and effective ways to maximise your borrowing power.
1. Sort out your credit cards
If possible, pay out and get rid of most of your credit cards. Reduce your limits to the minimum that you need in order to minimise the negative effect credit cards can have on your borrowing power. You should also seek to get rid of personal loans at all if possible.
2. Be careful with your credit file
A little-known ‘deal breaker’ is that multiple credit inquiries over the 8-12 month period before you apply for a loan will mean that you may fail some lenders’ credit scoring systems.
3. Don’t undercharge tenants
If you already have investment properties, charge the market rate for the rent, and don’t discount; this will minimise any discounting that lenders apply to your rental income.
4. Maximise your income and stay put
Declare every piece of income you possibly can, over as long a period as possible. Lenders want to see income over a sustained period of time. If you’ve taken a second job, stick at it for at least six months. It also helps to remain stable in both your employment situation and in your residual situation – if you move house once a year, it’ll count against you.
5. Consider alternative options
If you’re having trouble satisfying serviceability requirements – especially as a first-time buyer – it may be worth considering a family guarantee or similar. More lenders are agreeing to allow someone with either a big enough deposit or a property as collateral to act as a guarantor.
If you would like to discuss your borrowing capacity and finance options, please don’t hesitate to contact us for a confidential discussion.