Maximising the amount a lender will hand over to you isn’t about trying to take on unmanageable levels of debt. It’s a matter of taking a few simple but smart steps that could mean the difference between toiling in that ‘fixer-upper’ or owning your dream home.
If you’re looking to borrow as much as possible so you can purchase a home these 9 tips will certainly put you on the right path to success.
Shop around for lenders
Different lenders define income in so many different ways that it pays to use a credit adviser who knows their way around what’s included and what’s not. One lender may allow share dividends as income, while another lender may not.
Shop around for the right mortgage
One of our finance brokers can help you choose the most appropriate mortgage. Even with one lender, your borrowing capacity can vary due to the loan type that you choose. If you add features such as a line of credit this can reduce the amount you can borrow.
Update your financial records
Ensure that you have your PAYG income tax return as up-to-date as possible. This gives a better historical view of your income than just the two most recent payslips.
Check your credit rating
Roll your debts into your mortgage
Unsecured debts such as personal loans and credit cards have expensive monthly repayments, and these monthly repayments cut in to the amount you can repay on a mortgage.
Reduce debt and credit limits
Pay down your credit card debt. If you have unused credit cards with limits that are more than you need, then cancel those cards. Also, cancel any other cards – such as department store cards – that give you credit. Every $1000 on a credit limit – even if not spent – detracts from the amount you can borrow.
Investigate family pledges
Guarantor or family pledges may let your parents or family take out a second mortgage on a percentage of their own property to guarantee repayment to the bank if you fall behind. Or ask your parents, they might help you borrow by contributing part of your deposit.
Take a long loan
While 25-year mortgages have been the norm, that’s changing to 40 years in some cases. A longer loan period cuts your repayments, but increases the total interest you will pay over the life of the loan.
Save more of the deposit
Lenders look for consistent saving records, preferably for more than six months. Saving more can be as simple – or as hard – as doing without that extra coffee, or taking your lunch to work each day. It all adds up and reduces the amount you need to borrow.
If you need help with finance or would like know exactly how much you can borrow from a bank or lender call and have a chat with us on 1300 888 299 or send us and email.
General Advice Warning: This blog is not designed to replace professional advice. It has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the advice, in light of your own objectives, financial situation or needs before making any decision as to what is appropriate for you.