Borrowing Capacity

When purchasing a house or an investment property, your ability to borrow money is critical. It'll impact the amount of money you have to pay for a home.

Lenders compute your borrowing capacity or the maximum amount you may borrow on a house loan. The lender considers a wide range of characteristics, including your age, income, spending, outstanding debts, employment situation, and whether or not you have children.

Borrowing power varies amongst lenders. However, it is feasible to increase your borrowing power so that you may increase your property possibilities. 

This article will run you through some clever techniques to boost your borrowing power.

Be Aware of Your Credit Score

When you apply for a house loan, your lender will examine your credit score. Knowing your credit score may help you identify whether you're in good financial standing and whether you have any credit concerns. 

If you're concerned about having a 'thin file' or a short credit history, be assured that a lender prefers it to a negative record of defaulted debts and the like.

Getting the Right Home Loan

Take your time while looking for a home loan. Make sure to analyse the aspects of the loan product to see whether it fits your needs. Packaged goods, offset accounts, and other loan characteristics might influence how much your lender will offer you.

Budgeting Your Expenses

Your lender will evaluate your expenses in addition to your income, such as rent, energy bills, school fees, and childcare costs if you have children. Cutting costs will help you save money for a deposit while increasing your borrowing power.

Sorting Out Your Finances

When applying for a mortgage, organising your financial documents, including completing your tax returns and having up-to-date information on your income, will save you time.

Secure Your Deposits

Because lenders look for a consistent saving record, accumulating more money for a housing deposit might enhance your borrowing capability. This demonstrates your ability to make timely mortgage payments. A larger deposit lowers the amount of interest charged and your monthly payment.

Consolidating Your Debt

Credit cards and personal loans are pricey unsecured debts that restrict the amount you can repay on a mortgage. Note that if you pay off your credit card in full every interest-free period, you won't incur interest, which might help your credit score. 

You can boost your borrowing capability by working to lower your high-interest loans. If you have multiple loans with varying interest rates, you can take out a debt consolidation loan to pay them all off and pay only one loan.

Get Rid of Excess Credit Cards

Do you have any credit cards that aren't being used? Because lenders will evaluate any credit cards drawn to their maximum limit, you may want to consider getting rid of them and lowering the limit on any cards you have.

Getting Better Income

One of the best ways to boost your borrowing power is to earn more money. Consider saving your tax refund, renting out your extra room, or working a few additional hours. Consider your capacity to ascend through the ranks in your workplace and negotiate a raise in salary.


There are plenty of ways to increase your borrowing power to afford a house or investment property. Taking your time and considering all of your options will help you determine which strategy works best for your situation. 

Make sure you make good decisions and avoid the mistakes that can put your finances in jeopardy.

Are you looking for the best mortgage brokers in Sydney? Wealthy You offers a variety of mortgage solutions to meet your specific financial needs. Get your mortgage approved today!