8 Powerful Ways to Increase Your Borrowing Power
Are you looking to buy a home in Australia? If so, you’ll need to have a good understanding of your borrowing power. Your borrowing power is the amount of money that a lender is willing to lend you to buy a home.
There are a number of factors that lenders consider when determining your borrowing power, including your income, your expenses, and your credit history. If you’re looking to increase your borrowing power, there are a number of things you can do. Here are a few tips:
- Save a larger deposit: The larger your deposit, the less you’ll need to borrow from a lender.
- Increase your income: If you can increase your income, you’ll be able to afford a larger mortgage repayment.
- Reduce your expenses: If you can reduce your expenses, you’ll have more money available to put towards your mortgage repayments.
- Improve your credit score: A good credit score will make you look like a more reliable borrower to lenders.
If you’re an Australian expatriate living overseas or a foreign buyer, there are a few additional things you can do to increase your borrowing power. Here are a few tips:
- Get a letter of support from your employer: This will show lenders that you have a stable job and that you’re likely to continue to earn an income.
- Get a letter from your bank confirming your savings: This will show lenders that you have the financial resources to make your mortgage repayments.
- Get a credit report from a credit bureau in Australia: This will show lenders your credit history and help them to assess your risk.
Get a free Australian mortgage assessment today.
8 Ways to Increase Your Borrowing Power
Buying a house is a big step, and securing a mortgage can be a daunting task, especially if you’re an Australian expat living overseas or a foreign buyer. Fortunately, boosting your borrowing power has never been easier. In this comprehensive guide, we’ll explore eight effective strategies to increase your borrowing power.
1. Understand the Basics: What is Borrowing Power?
Borrowing power refers to the amount of money a lender, such as a bank or other financial institution, is willing to loan you. This is determined by various factors, including your income, expenses, existing debts, and credit history. The higher your borrowing power, the more money you can potentially borrow.
2. Leverage a Guarantor to Boost Borrowing Power
One of the fastest ways to increase borrowing power is through the use of a guarantor. A guarantor is a third party, typically a family member, who offers their own property as security for your loan. This can dramatically increase your borrowing capacity as it reduces the risk for the lender.
So, does having a guarantor increase borrowing power? Absolutely! Not only does a guarantor increase borrowing power, but they can also help you avoid paying Lenders Mortgage Insurance (LMI).
3. Capitalise on Equity to Improve Borrowing Capacity
Does equity increase borrowing power? Yes, indeed! Equity refers to the difference between the market value of your property and the remaining balance of your mortgage. By leveraging this equity, you can significantly boost your borrowing power.
4. Harness the Power of a Borrowing Power Calculator
A borrowing power calculator is an invaluable tool for understanding your financial position. These online tools provide a snapshot of how much you might be able to borrow based on your income, expenses, and other financial factors.
5. Apply for a Loan with the Best Bank for Borrowing Power
Choosing the right lender can make a significant difference in your borrowing capacity. Each bank has its own criteria and assessments, so it’s crucial to find the best bank for borrowing power. Researching and comparing different lenders can help you secure the most favourable loan terms.
6. Understand the Average Borrowing Power in Australia
Understanding the average borrowing power in Australia can provide a benchmark for your borrowing expectations. Remember, this is an average figure and your individual circumstances may allow you to borrow more or less.
7. Utilise Government Schemes to Enhance Borrowing Power
The Australian government offers various schemes to help individuals and families secure their dream homes. These schemes can significantly increase your borrowing power.
8. Implement Strategies to Increase Borrowing Power in Australia
There are numerous strategies you can use to increase your borrowing power in Australia, such as reducing your debts, improving your credit score, and increasing your income.
Conclusion
Increasing your borrowing power isn’t an overnight process, but with the right strategies and planning, it’s entirely achievable. Whether you’re an Australian expat living overseas or a foreign buyer looking to invest in Australian property, these tips can significantly boost your borrowing capacity.
Ready to take the next step? Contact us today and let our expert mortgage brokers guide you on your journey to homeownership.
Get a free Australian mortgage assessment today.
Frequently asked questions
Yes, having a guarantor can increase your borrowing power. A guarantor is someone who agrees to be responsible for your mortgage repayments if you are unable to make them. This can make you look like a more reliable borrower to lenders and can increase the amount of money you can borrow.
Yes, equity can increase your borrowing power. Equity is the difference between the value of your home and the amount you owe on your mortgage. If you have a lot of equity in your home, you can borrow more money against it.
There is no one “best” bank for borrowing power. Each bank has its own lending criteria and interest rates. It’s important to shop around and compare offers from different banks before you apply for a loan.
The average borrowing power in Australia is around $400,000. However, this can vary depending on your individual circumstances.
The Australian government does not have a specific program to increase borrowing power. However, there are a number of government initiatives that can help you save money and improve your credit score. These initiatives can make it easier for you to qualify for a loan and get a better interest rate.
If you’re looking to buy a home in Australia, it’s important to understand your borrowing power. By following the tips in this article, you can increase your chances of getting approved for a loan and buying the property of your dreams.
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