What impacts your borrowing power
Are you wondering how much money you can borrow from a lender? Having an understanding of your borrowing power is important if you are considering purchasing a home. Only once you are aware of this can you properly start searching for a home.
What impacts my borrowing power?
Your borrowing power is primarily determined by the below:
- Your income
- Existing debts such as personal loans or credit cards.
- Your living situation – whether you are purchasing the home alone or with someone else.
- Your liabilities – this may include your dependants.
A lender wants to see evidence that you will be able to service the loan. This is why a good credit history and savings are important.
If you are concerned about your borrowing power then you can begin to take steps to increase it. Sit down and look at what debts you currently have. Set yourself a budget that will allow you to make repayments on your debts, enough so that you can pay it off. If you are also expecting a pay rise later in the year, than perhaps consider lodging your loan application after this has occurred.
If you are unsure of what your borrowing capacity may be, you can also use online calculators to give you an indication. Click to here to use one.
A mortgage broker will be able to work with you to determine your financial situation and based on that, find you the right home loan so that you achieve your dream.