Did you know that your credit card limit, not your spending, impacts your borrowing capacity? For example, a $10,000 limit on a card you only use for $2,000 to $3,000 monthly can significantly reduce the amount banks are willing to lend you. By lowering your credit card limit or paying off personal and car loans, you can free up your borrowing capacity, making a big difference when applying for property loans.
Those enticing “12 months interest-free” offers might seem harmless, but they can harm your credit score and borrowing potential. These deals often leave a record on your credit report, which lenders scrutinize. Instead of opting for interest-free arrangements, consider saving up or using lay-by options for your purchases. Protecting your credit history is key to accessing better loan options.
Every credit inquiry leaves a mark on your report. From balance transfers to mobile phone plans, too many inquiries—more than six over a few years—can alarm lenders and even result in loan rejections. This also applies to pre-approvals. While they are helpful for auctions or serious buyers, excessive pre-approval applications can harm your credit standing. Plan your inquiries carefully to avoid unnecessary impacts on your borrowing potential.
Lenders now require a detailed breakdown of your living expenses. This is an excellent opportunity to evaluate your spending habits and identify areas where you can cut back. Reducing discretionary expenses can not only improve your savings but also enhance your profile in the eyes of lenders.
Higher rental income can directly improve your borrowing capacity. Consider making small, cost-effective improvements to your investment property, like a cosmetic renovation or enhancements that add value for tenants. A higher rental yield strengthens your income position, making it easier to secure financing for your next property.
If you’re over 50, lenders often require a clear exit strategy to ensure you can manage repayments as you approach retirement. Discuss your long-term plans with a mortgage broker to align your investments with your financial future and maintain access to the funds you need.
Navigating the lending landscape can be overwhelming. A mortgage broker has access to a wide range of lenders and loan products, offering tailored solutions that match your unique circumstances. Unlike banks that only provide their own options, brokers can expand your possibilities, helping you secure better terms and higher borrowing limits.
