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How much can I borrow?
For you, this might mean reducing any ‘unnecessary’ spending (e.g., online shopping, frequent dining out) and seeing where you can make savings.
You might be able to negotiate better deals on your utility bills and internet, for example. Or maybe you can cancel your streaming service subscriptions for a few months.
For most home loan applications, lenders will request bank statements dating back 6 months prior to lodging the application. They want to see long-term saving habits and responsible spending.
4. Develop your credit score
Having a good credit rating and healthy credit history can boost your borrowing power. It indicates to lenders that you know how to responsibly handle credit.
Being aware of your credit history is the first step towards improving it. You can check your credit score for free every 3 months and it’s smart to take advantage of this. Focus on paying your loan and credit card repayments on time, as well as paying any bills on time.
5. Lower credit card limits
Did you know that lenders consider your monthly credit card limit a potential debt?
Yep, that means that even if you aren’t maxing out your credit card each month, lenders still see a high credit card limit as a risk. Your borrowing power may be negatively affected as a result.
Consider lowering the limit prior to a home loan application. If you don’t really need your credit cards, think about cancelling them – at least temporarily.
6. Choose a lender that suits your needs
If you’re a borrower in a more complicated situation, you might want to find a lender that specialises in helping people like you.
For example, self-employed people can face a tougher time getting approved for a home loan – especially if they’re unable to provide sufficient supporting documentation regarding income.
Luckily there are lenders that specialise in providing loans for self-employed individuals, or individuals with poor credit, for example.
A specialty lender might grant you a greater borrowing power too. Book an appointment or start the application process with our online application form, to find a lender that could suit your needs.
7. Keep your employment stable
Frequent job hopping can make you look like a bit of a flight-risk in the eyes of some lenders.
While it’s normal to infrequently change jobs (e.g., to get a better salary), be smart about your employment choices.
Many lenders prefer to see that you’ve been at your current job for at least 3 months and completed your probationary period.
Maintaining consistent employment can help evidence that your income is stable, and you’ll be in strong position to repay a mortgage.
8. Save up a large deposit
As obvious as it may sound, having a larger deposit means you won’t have to borrow as much money from the lender when purchasing a home.
Because you’ll be lower risk to the lender, your borrowing capacity will likely be greater.
Do savings affect borrowing power?
Yes, your savings can affect your borrowing capacity.
Lenders want to see evidence of ‘genuine savings. This refers to money that you’ve saved over an extended period. It indicates positive financial habits and presents you as a lower risk borrower.
Having more money in your savings also likely means that you’ll have a higher deposit, meaning that you may not require as much money from the lender. Alternatively, it could help you borrow more money to buy a more expensive property.
If you want to get an idea of what your borrowing capacity could be, try out Borrowing power calculator Still have questions about your borrowing power? Book a no obligations appointment to learn about how much you could borrow for your next home loan.