Increase Borrowing Power Strategies: Borrowing power is a critical factor when it comes to securing loans, whether for a home, car, business, or personal use alike. It determines how much money a lender is willing to lend you based on your current financial circumstances.
Increasing your borrowing power can open more opportunities and allow you to access larger loans or better terms. Here are some strategies to easily boost your borrowing power:
Improve Your Credit Score
Your credit score is one of the most influential factors in determining your borrowing power. Lenders use it to assess your creditworthiness. This essentially shows them how much they can trust you with the money they lend you.
Some easy ways to improve your credit score include:
Paying bills on time: Consistently paying bills, loans, and credit card balances on or before the due date can improve your credit score over time.
Reduce outstanding debts: Lowering your credit card balances and paying off other debts can positively impact your credit utilization ratio, which affects your credit score.
Check your credit report: Review your credit report for errors and dispute any inaccuracies. A clean and accurate credit report can help you qualify for better loans.
Increase Your Income
Lenders often consider your income when determining how much you can borrow. This isn’t something that everyone can easily achieve, but if you can increase your income, your borrowing power can increase quickly.
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If you’ve been performing well at work, consider speaking with your employer about a raise or promotion, otherwise, you can look at other income sources, like part-time jobs or freelance work. Any income from rental properties or other assets can also contribute to raising your borrowing power in the eyes of the lender.
Save for a Larger Deposit
A larger deposit can significantly increase your borrowing power because it reduces the loan-to-value ratio (LVR). Not only will this potentially allow you to borrow more money, but you will also usually get better terms and rates with a lower LVR.
To boost your savings, establish a budget that allows you to save more money each month to put towards your deposit, and consider speaking with a financial advisor to create a plan to reach your savings goal.
Part of this will include reviewing your current expenses to see if there are any you can eliminate or improve on.
Choose the Right Loan Term
The loan term you select can also affect your borrowing power. While longer loan terms result in lower monthly repayments, they can also limit the amount you can borrow. Shorter loan terms typically allow for larger loans.
Carefully consider the loan term that aligns with your financial goals.
Consult with an Expert
Mortgage brokers are financial experts who can help you navigate the lending landscape and find the best loan options to increase your borrowing power. Our Glass advisors have access to a wide range of lenders and can provide personalized advice based on your financial situation.
Need an expert financial advice?
Improve Your Employment Stability
Lender’s value stable employment because it demonstrates your ability to repay loans. If possible, avoid frequent job changes, as most lenders prefer applicants with a steady employment history.
You can also pursue furthering your education or training so you can improve your employability and earning potential.
Overall, increasing your borrowing power can be achieved using a combination of several rather straightforward methods. On top of increasing your borrowing power, this will also help with other aspects of your finances, allowing you to save money.
If you want to unlock greater financial opportunities and achieve your borrowing goals, be sure to speak with the Glass Financial team today! Our advisors will help you find the very best deal, plus we will always help you to save the most money possible.
Speak with us today on 1300 245 277 or send an email to [email protected].
