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Maximising the amount a lender will hand over to you isn’t about trying to take on unmanageable levels of debt. It’s a matter of taking a few simple but smart steps that could mean the difference between toiling in that ‘fixer-upper’ or owning your dream home or in fact being able to build a solid real estate portfolio aimed towards maximising what you are able to do with your resources.  Find the 6 ways you can maximise your borrowings to enable your property goals.

  1. Be Strategic About Lender Selection

Different lenders have different lending calculators and credit policies. Some lenders are more conservative than others when it comes to servicing calculations. Further different lenders offer different policies around interest only periods, debt recycling, future flexibility with equity cash out. Look at a the holistic picture of where you are and where you want to go and work with an investment savvy finance broker to ensure both the servicing calculators and lending policies have been taken into account so you exhaust your borrowing with one lender before moving on to the next.

  1. Convert Loans to Principal and Interest (P&I) post Interest Only (IO) Periods are Over

Lender servicing improves with P&I repayments. Flick to P&I once the IO period is over. Talk to your tax accountant regarding tax implications of P&I vs. IO.

  1. Maintain a ‘Good’ Credit Rating

Ensure you maintain a clean credit history by paying utility bills and existing loan repayments on time. Do not apply for multiple home loans with multiple lenders as each creates a credit hit on your credit file. Multiple credit hits mean lenders consider you desperate for funds. Work with a savvy mortgage broker to ensure that servicing calculator for the most suitable lender have been run up front prior to any loan applications having been put through to the lender.

  1. Consolidate Multiple Debts into Your Mortgage

Unsecured debts such as personal loans and credit cards have expensive monthly repayments, and these monthly repayments cut in to the amount you can repay on a mortgage. ‘Refinancing’ unsecured debts has potential to consolidate the debt to be part of your home loan at a much lower interest rate.

  1. Reduce Credit / Store Card Limits

If you have unused credit cards with limits that are more than you need, then cancel those cards. Also, cancel any other cards – such as department store cards – that give you credit. Every $1000 on a credit limit – even if not spent – detracts from the amount you can borrow. Lenders consider minimum re-payments of 3% on credit cards regardless of the amount owing. If you have $20,000 worth of credit cards, minimum assumed re-payments are $600 per month.

  1. Save More Of The Deposit / Utilise Existing Equity Cash Outs to Minimise Loan to Value Ratio (LVR)

Reducing how much you borrow on a purchase due to ‘higher’ savings or ‘higher’ use of existing equity cash outs (existing debt) assists you to be able to enable greater borrowings across lenders.

Property Twins are a mortgage broking business assisting investors build solid property portfolios. Get in touch with Sana and Mona Ali at 1300 97 60 60 or [email protected]


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Note: Please ensure you always seek specific specific credit, tax, financial, legal or investment advice. Property Twins' Blogs are not a substitute for personal and specific, taxation, financial, legal or investment advice
2 thoughts on “6 Ways To Maximise Your Borrowing Capacity To Build A Property Portfolio”
  1. Silver

    Hi Twins,

    Thanks for the tips. I have three credit cards of $30K credit limit total. Frankly if I hide my credit limits and inform $10K to my lander, is it going to be verified in any way other than the ethical point?

    thanks
    Silver

    • admin

      Your credit file will have the enquiries 🙂

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