Your Finance Adviser

While buying a home or an investment property, your borrowing capacity is a consideration as important as buying the property itself. Your borrowing capacity affects the amount you spend on your property. However, this capacity can be improved so that you can broaden your choice of property. Given below are a few ways that help you increase your borrowing capacity-

* Know your credit score- While applying for a mortgage, the first thing that the lender would check would be your credit score. This would help you determine whether you are in a healthy financial situation and if there are any issues with your credit history. The results will tell you if you need to work on your credit score or if it is just fine to borrow the loan amount as per your needs.

* Reduce your debts- Credit score and personal loans are unsecured debts that are very expensive and as a result, reduce the amount that you need to repay on a mortgage. Using a Borrowing Power Calculator to determine how much amount you can borrow and allow you to understand whether you need to increase your borrowing capacity or not. If you increase your borrowing capacity, it would help you reduce your high interest rate debts.

* Reduce excess credit limits- You might want to get rid of all your unused credit cards and cut the limit on any cards to be on a safer side while applying for a loan. The lenders consider any credit cards to be drawn to their full limit. A Credit Card Calculator will help you determine the amount of debt you carry while allowing you to figure out ways of reducing excess credit.

* Choose the right loan- While looking up for a loan for your property, you must take time to consider the features of the loan you are borrowing. It is of utmost importance that the loan you borrow meets all your borrowing needs and offers you the interest rate that you can manage to pay easily. Experienced Mortgage Brokers in Australia will inform you about various types of loans that you may borrow with regard to your borrowing and repayment capacity.

* Organize your financial affairs- When applying for a mortgage, keeping all your financial records organized and in place, including your tax returns and having updated information on your income will save you time and efforts.

* Save money for your deposit- The more money you save for your deposit, the more will be your borrowing capacity. While offering you the loan, the lenders look for a consistent saving record; this implies that you can afford to pay regular mortgage repayments. You might also want to cut down your expenses such as your rent, utility bills, childcare costs, etc. This will ultimately help you increase your savings for your deposit.

* Split your liabilities- Instead of buying the entire property in your own name, you may consider splitting your expenses on-paper with your partner. For instance, if you prove that your partner can provide for your dependents financially, they may not be counted as your dependents in the application.

* Take a longer mortgage term- A comparatively longer mortgage term can reduce your monthly repayments. The longer the loan duration, the lesser will be the monthly repayments. However, this also implies that the total interest you pay over the life of the loan will be higher.

If you are shopping around for a mortgage, tools like Borrowing Power Calculator and Credit Card Calculator will of utmost assistance in your loan borrowing process. Getting associated with renowned and experienced Mortgage Brokers in Australia will make the loan borrowing process much easier and favorable for you. For personalized assistance, you may contact lending specialists from Your Finance Adviser.