Boost your Borrowing Power with 5 Tips from Lenders


It’s simple really – when buying a property, your ability to borrow what you want depends on your capacity to pay the Lender back.  Just like lending your car to a friend or your child, you want to be assured that they’ll do their utmost to take care of it and bring it back to you intact. The banks are no different.


To determine your borrowing power, your lender will take a close look at your credit history. They will ask to see income and credit card statements, an asset register, a budget and any documents relating to loans or savings that you have.


So how can you boost your borrowing power? You can make a big difference to the amount a lender will give you by following these 5 tips:


Tip #1:  Pay Down Debt

Credit card debt, personal and car loans can be heavy chains around the neck. Look for ways you can consolidate the debts into a lower interest loan to make it easier, then work out how much you can afford to repay these debts as quickly as possible. If you feel like you can’t do without your credit or store cards, think again – how much importance are you putting on purchasing that property you’ve been wanting? There are plenty of experts out there who will tell you that by increasing your borrowing power you need to ‘cut those cards up’. You can do this!


Tip #2:  Be a Budget Buff

You may have written up a budget before but have you stuck to it? Showing that you can stick to a budget is one of the most impressionable characteristics for lenders.

An accurate, well thought-out budget will give you good insights into where you can cut back, ultimately boosting your savings. Make sure your budget includes:

  • weekly costs, eg groceries, petrol, Friday night pizza and drinks
  • fortnightly costs, eg rent/mortgage
  • monthly and quarterly costs, eg phone bills, electricity, subscriptions
  • annual costs, eg car registration, rates, Christmas and birthdays
  • incidental costs, eg car maintenance and repairs, your friend’s wedding, travel (only absolutely necessary)


Keep your budget a ‘working’ document so at the end of every month or fortnight, you can analyse any figures that need revising. Show your budget to your prospective lender so they know you’re serious about paying them back.


Tip #3:  Trim the Fat

If you really think about it, we spend a lot of small amounts of money on things we don’t really need. For instance, a worker might buy 3 specialist coffees every day at work, plus morning tea and lunch, and not think that they’re spending a lot of money… it’s only $4 for that coffee right? According to McCrindle Research, the average Australian employee spends nearly $20 a day on lunches, snacks and beverages during the workday. That equates to $100 in a working week! Think about how much money you would save if you took the time in the morning to make your own cuppa in a big thermos, and pack your own lunch and snacks. What a difference this would make to your borrowing power!


Other ‘trimming the fat’ ideas you might consider include:

  • use public transport to save on petrol, running costs and parking
  • cancel the gym membership and take exercise outside, or use YouTube workout clips at home
  • if it’s an option, rent out a room or move back home
  • knock those online subscriptions down to none or just one


Remember, all these tips only need to be temporary. Keep remembering why you’re doing it. Every so often, make sure you reward yourself with a trip to your favourite cafe – it will mean so much more when you know you deserve it.


Tip #4:  Quit the Buy Now, Pay Later Habit

The Buy Now, Pay Later scheme has become the modern day tempter for buyers, but there’s a trap of spending more than you’ve got, and it can result in costly late fees. It will take self-discipline to block these out, especially if you’ve become a habitual Buy Now, Pay Later shopper. Concentrate on paying off your debts and closing your accounts, and ignore the ‘buy now, pay later’ or ’12, 24, 36 months interest-free’ messages – they’re just traps to not get you where you want to go.


Tip #5:  Shop Around

Bank lenders and mortgage brokers are just like mechanics. Sometimes you have to shop around to get a good one. There are different lending policies and calculation methods out there, so make sure you’re up with the lingo.


You’ll be amazed at how using the tips above can increase your borrowing capacity in a relatively short amount of time. Depending on your personal circumstances, it might only be four to six months. Once you’re in a better financial position, you’ll have more confidence and borrowing power to negotiate your way into a mortgage contract best suited for you.