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7 ways to increase your borrowing capacity

By Tim Marsh

When looking for finance, many people want to know the maximum amount they can borrow. This is called your borrowing capacity. This figure can be affected by your income and any debt you have.

You may be wondering how you can increase your borrowing capacity. Here are some of Loanmarket’s top tips.

1. Save a larger deposit

It may take you a little longer, but saving a larger deposit can help you borrow more. You’ll have more equity to use when buying your home. At the same time, having a larger deposit will also show your lender you have the ability to save.

2. Pay off debt

Make a point to pay off all the debt that you can before applying for a home loan. Pay off your credit cards, personal loans, hire purchases and other debts. You’ll be doing yourself a favour in the long-run too, as getting rid of this debt as soon as possible will result in less interest paid.

3. Think about a fixed loan

One of the advantages of obtaining a fixed loan is knowing how much your repayments will be. This is also a good way to increase your borrowing capacity, as your costs over a period of time will be fixed.

4. Reduce your expenses

Eliminate any unnecessary expenses in your life. These could include saving on groceries, utilities, clothing or entertainment. Once this has been done, your outgoing expenses will be lower and you’ll be in control of your finances and a more attractive candidate.

5. Increase your income

It’s easier said than done, but increasing your income is great way to boost your borrowing capacity. Perhaps you could take on a paying flatmate, get some extra shifts at work or obtain a loan with your partner.

6. Resolve your credit issues

Have you ever obtained a credit check? These are a great tool to help you clear up your credit issues.  They can show you whether you have any bad debts or money outstanding and if your credit rating is good. From there, you can identify what needs to be paid and if there are any errors potentially showing up on your record.

7. Stay on top of your finances

Your financial records are important and you’re going to need them when you apply for a home loan. Keep track of your spending habits, income and savings and use these as evidence to prove you’re financially stable. This will help make you look more trustworthy and financially switched-on. It’s also good to have current information about your income so you can prove you can meet repayments.

Article first appeared on, and is courtesy of,

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