How can you improve your buying capacity?

When you are looking to buy a home you might look at mortgage repayments and set yourself a budget; you know you have enough to make the regular repayments and live comfortably, but what about if the bank doesn’t’ seem to agree?

The first step is making yourself more attractive to the banks. We have a few handy hints and tips to start making yourself a more desirable home loan candidate.

Become a more desirable home loan candidate:

When the banks assess you for a home loan, they look at your ability to pay your home loan back; they consider your wages, any additional incomes and your existing debts, and your credit rating.

• Did you know that a credit card is considered a debt, even if you have not used it? Yes, if you hold a credit card with a maximum limit of $15,000 for example, even if it is untouched, you will be considered to have a $15,000 debt. So, if you have a credit facility that you are not using either close it or have the limit reduced.
• Whilst people like to keep their savings for a rainy day, it can make sense to pay off any debts you have using your savings as generally the interest rate you are charged by the bank will be higher than the rate of interest you receive for your savings. Just ensure you keep enough aside for an emergency.
• One of the best ways to look better to the bank, is to be paid better. Why not ask your boss for a pay rise, they might say no, but then again, they might say yes!
• As a business owner working with your Accountant is important to minimise your tax obligation by claiming legitimate expenses etc. The timing of this can affect your borrowing capacity. So if you are thinking of borrowing for a home loan it is always a good idea to have your Mortgage Broker work with your Accountant to get you in the best position before you apply for a loan.
• Live on a budget and show the bank that you are comfortable, if there is evidence that your pay is spent the day it hits your account it won’t instil much confidence in your ability to pay back your home loan.

Why not speak to your local and trusted mortgage broker at Gold Seal Finance. If you’re in or around the Brisbane and Logan area you should pop in for a chat, or alternatively we can come to you. When it comes to a home loan, one size does not fit all. We have a range of options from a range of providers that we can tailor to suit you. Why not give us a call on 07 3423 3877.

General advice warning

This information and the links provided are for general information only and should not be taken as constituting legal, financial or professional advice. You should consider seeking legal, financial, or other advice to check how this information relates to your unique circumstances.