How to maximise your property loan borrowing
Property buyers are still buying despite increasing interest rates, and if you are looking to buy, you probably want to maximise your borrowing capacity so you can purchase the home of your dreams or that ideal commercial property.
Here we list some things you can do to achieve maximum borrowing capacity when lenders are tightening credit and their assessment policies. Plus, new buyers be wary of your pre-approval in this current market.
Improve your credit score – a higher credit score can increase your chances of qualifying for a larger loan amount and obtaining favourable interest rates.You’re entitled by law to get one free credit report every 12 months, or within 90 days of receiving a credit rejection. It is important to keep a track of your credit score if you are planning on borrowing money.You require a good credit score to maximise your borrowing capacity with any lender for a mortgage.Get a copy of your credit file and see if there’s an area you need to address. The credit reporting bodies are:
- illion (formerly trading as Dun & Bradstreet Australia): https://www.illion.com.au/
- Equifax (previously known as Veda): https://www.equifax.com.au/personal/products/my-credit-file
- Experian Australia: https://www.experian.com.au/
Save for a larger down payment – Reducing your loan amount size by offering a larger deposit can reduce your borrowing costs.
Cancel other debt or consolidate – HELP/HECS debts, credit cards, interest free loans, and buy now pay later arrangements are all included in a credit assessment. By paying these out or possibly consolidating these debts against your mortgage for a lower interest rate and longer term will help in increasing your borrowing power.
Consider joint applications – By purchasing a property with a spouse or partner allows a lender to consider both incomes.
Shop around – different lenders have varying loan programs and criteria. By comparing lenders, you can find that credit policies and criteria can differ and where there can be a large range of maximum borrowing limits.
New Home Buyers, be aware about pre-approvals in this current marketplace. Because of changing interest rates, new home buyers need to be aware that their pre-approval may become invalid if interest rates change. So while you are buy looking for your dream home to buy – be careful not to enter a bid until you have checked that your current pre-approval is still valid. If interest rates rise, you may not be able to borrow as much as you had previously been pre-approved for.
As a broker we have access to 60+ home mortgage and business lenders who offer a large suite of home and business loan products. We can do this work for you rather than shopping around, and with our own specific technology allow us to determine maximum borrowing capacity quickly.
Warning – by borrowing the maximum amount possible may seem attractive, it’s important to consider increases in rates, your personal income and family circumstances, and your long-term financial goals by not compromising your overall financial wellbeing.