How to manage your credit to maximise borrowing power

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When it comes to planning your home purchase, how much money you have to work with will depend in large part on your home loan borrowing capacity. Essentially, this is a figure representing approximately how much you can expect lenders to let you borrow.

There are a few things that you can do which may have a positive impact on the amount that you can borrow. The first thing you need to do is get your debts in order. You need to minimise your outgoings so review your credit cards which attract high interest rates that can chew into your mortgage borrowing capacity.

Lenders take all your credit cards into account when assessing your application, so it is a good idea to cancel any cards you no longer use or need. When you’re applying for finance, the lender calculates not the outstanding balance on your credit card, but the limit. Due to this you should review your spending over the last several months and lower the limit on the credit cards you do use if possible.

If you are very responsible with your credit cards and use them for your expenses and pay it off in full each month there are some lenders who will consider this in your application. In this instance the lender may request at least three months of consecutive statements.

Another way to give your borrowing capacity a boost is to consolidate any other higher interest debts that you have. Consolidating debt can mean immediate savings in interest rates and it also means you’ll have a much easier time managing your debt. If you have debts with several lenders consolidation can help you put together a manageable plan that can empower you to start saving.

As you can see, there are many factors which can affect how much you can borrow. Luckily, with some expert advice, you can find a way to maximise your home loan potential.

Everyone’s circumstances are different but I can help you to pull all the pieces together to give you an overall picture of how your application is looking. To get more detailed information on your situation, talk me today.

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