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How to increase borrowing power?

Increasing your borrowing power for a home loan can be achieved through several strategies.

One of the key factors that determines your borrowing power is your credit score. A high credit score indicates good creditworthiness and can increase your chances of having your loan approved with favourable terms. To improve your credit score, make sure to:

Pay your bills on time
Limit living expenses
Reduce existing debts
Maintain a low credit utilisation ratio
Regularly monitor your credit report for errors
Only apply for credit you really need, as the more credit enquiries on your report, the lower your score
Another important factor that lenders consider is your income. Increasing your income, for example, through a raise, promotion, or adopting a side gig, can improve your borrowing power

Lenders also review your existing debts when assessing your application for a home loan. Paying off high-interest debts or consolidating multiple debts into a single loan with better terms can positively impact your borrowing power.

Saving for a larger down payment on your home loan can also demonstrate financial stability and increase your borrowing power. A larger down payment results in a smaller loan amount required and can improve loan terms.

Finally, having a guarantor, who is typically a family member, can help you secure a home loan by agreeing to offer their own property as additional security for the loan. However, it's important to consider the responsibilities and risks associated with having a guarantor.

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