How to increase your borrowing power

Interest-RatesInterest rates might be at record low rates, but unfortunately for many potential buyers in the Bacchus Marsh area, house prices aren’t.

If you’re dream home is just slightly out of financial reach though, there are things you can do to help boost your borrowing power.

–       Start saving – Ok, so our first tip is fairly obvious but the most sure-fire way to increase you borrowing capacity is to have a big lump sum of money saved away in the bank. Save as much as you can to not only increase your equity and the amount you have available for a deposit, but also to show evidence to your lender that you can save and are responsible with your finances.

–       Minimise your debts – Banks will consider any outstanding debts or financial liabilities when determining your monthly income.  To help put you in a better financial position you should look at paying down your debts as much as you can or consolidating them. Depending on your situation, it may also be worth cancelling your credit cards or reducing your limit.

–       Check your credit rating – Have you ever checked your credit rating? It’s a good idea to check your rating before applying for a loan to find out if you have any bad debts or possible errors that need to be cleared up, as these will show up as red flags to someone looking at your financial record.

–       Shop around for the right lender and product – Not every lender is equal, so it’s a good idea to talk to at least a couple before deciding which one to go with. Similarly, each lender offers different products and your borrowing capacity may vary depending on the type of loan you choose.

–       Take out a longer loan – Extending the life of your loan will help reduce your monthly repayments, however it will also mean that you end up paying more interest in the long run. A 25-year loan is the norm, however it is possible to get a loan up to 40 years.

–       Get organised – Keep all your financial records up to date and organised, as you will need to show these to your bank to prove how financially stable you are. Make sure all of your records are current and can help show that you have the income needed to make your repayments.

For further advice about how to increase your borrowing capacity, it’s best to have a chat to a financial expert who will be able to give you advice based on your individual situation.

If you’re interested in finding out more about the prices of property in the Bacchus Marsh area then get in touch with one of the Professionals Arbee Real Estate team today and we’d be happy to offer advice about property in the local area.