How to Increase Borrowing Capacity: Easy Steps That Work

Buying a home is a big step, and one of the first things you need to understand is how much money a bank or lender will let you borrow. This is called your borrowing capacity. The more you can borrow, the more flexibility you have when choosing a home. But how can you increase borrowing capacity? Here are some easy and practical ways to improve your chances.

1. Reduce Your Debts Lenders look at your current debts, like credit cards, personal loans and car loans. The more you owe, the less you can borrow. Paying off these debts or reducing credit card limits can boost your borrowing power.

2. Increase Your Income It might sound obvious, but the more you earn, the more you can borrow. This could mean asking for a raise, picking up extra hours at work or starting a side hustle.

3. Cut Down Living Expenses Lenders look at your everyday spending. Keeping your expenses low shows that you can manage your money well and are more likely to handle loan repayments.

4. Consider a Longer Loan Term A longer loan term usually means smaller repayments. This can improve your borrowing capacity, although it might mean paying more interest over time.

5. Speak to a Mortgage Broker A broker knows which lenders are more generous and which ones are stricter. They can help match you with the right bank and give personalised advice.

Want to know how much you could borrow? Book a free meeting with our team today and get expert advice tailored to your situation. Or download our Ultimate First Home Buyer Guide to learn more.