Woman reading mortgage documents

Finding out how much of a house loan you qualify for is a crucial first step in home-buying. That said,  knowing your borrowing capacity before applying for a mortgage will always save you time and money. Even when others think that it would not benefit them, it does its part in ensuring that everyone has a clear idea of their borrowing capabilities in the foreseeable future.

First of All, What Is Borrowing Power?

If you want to get a mortgage, your borrowing capacity is the maximum amount a lender would be willing to give you. When a lender has confidence in your ability to repay a mortgage, they will provide you with a greater loan amount.

If you don't owe much money, have a sizable deposit saved up, don't spend too much on necessities, and have a secure job with a good salary, you may be able to borrow more money.

Valuable Tips for Increasing Your Borrowing Power

  1. Build Up Good Saving Habits

Lenders will look favourably upon borrowers who can show a consistent track record of financial savings. Money put aside in savings is an asset that can be used for financial gain. You can boost the amount you can borrow by showing proof of equity in a business or other investments to a lender.

  1. Claim All of Your Income

More verifiable income increases your bargaining power when negotiating for a larger loan. Rental income, government payments, and retirement savings can all be considered by some lenders. You'll need to show proof of income, such as payslips and tax records. It's possible that you'll need to provide even more information about your earnings if you're self-employed.

  1. Improve Your Credit Score

When was the last time you looked at your credit score? If you haven't already, it could be a good moment to start. If it needs a boost, avoid asking for too many loans or lines of credit in the time leading up to your mortgage loan application. Make sure you pay all of your payments and debts on time, as this will positively affect your credit score.

  1. Maintain Stable Employment

A key factor in increasing your ability to borrow money is keeping a steady job. Mortgage providers will want to see this to know that they can count on receiving payments from you each month.

  1. Pay Your Debt

You should try paying off as much of your existing debt as possible before applying for a mortgage. Why? Lenders will assume that you will be able to make mortgage payments on a larger loan if you have a lower debt load. Personal loans, auto loans, and credit card debt all fall under this category.

  1. Reduce Your Credit Card Limits

Do you absolutely need a credit card everywhere you go? Your ability to borrow money for a house loan could be enhanced by lowering this restriction before applying for financing. Lenders may limit your borrowing options if they determine that you have a credit card, even if you don't use the whole available credit each month.

  1. Review Your Expenses and Live within Your Means

One easy strategy to boost your borrowing capacity when applying for a home loan is to reduce your spending in the months leading up to the application. Reducing wasteful spending and shopping around for better rates on essentials like vehicle insurance and internet service are two ways to do this.

Before you apply for a loan, lenders may review your bank statements for the preceding three to six months to get a sense of how much money you've been withdrawing for living expenses. This helps them estimate how much of your monthly income can be applied to principal and interest payments on a mortgage.


Overall, having a strong borrowing power is essential for anyone looking to make a major purchase or take out a loan. By following the valuable tips outlined in this article, you can increase your borrowing power and make sure you get the best deal possible.

With a little effort and research, you can increase your borrowing power and get the loan you need by the end.

If you are looking for the best home loans in Sydney, look no further than our amazing options here at Wealthy You. We are an Australian Mortgage Company servicing Sydney for almost a decade and because of this, we can offer you a variety of mortgage solutions to meet your specific financial needs. As an alternative lending specialist, we make refinancing your home simple. Call us today, and let us discuss all your viable mortgage options.