7 Ways to Boost Your Borrowing Power

Are you hoping to buy a new property? Whether it's a cosy apartment in Sydney or a beachside villa in Queensland, getting a home loan is usually the first step towards turning that dream into reality. But before you dive into the world of home loans, it's important to understand your borrowing power as there are various factors that will affect this - from income and expenditure to your assets and liabilities. Here we take a look at borrowing power with some handy tips on how best to increase yours.

What is Borrowing Power?

Borrowing power is important to secure your home loan. Borrowing Power is the amount of money a lender is willing to let you borrow based on your financial situation, and what you can comfortably repay. Borrowing power takes into account your income, expenses, assets, and liabilities. 

What Affects Your Borrowing Power?

Several factors can influence your borrowing power:

1. Income: Your income is a primary factor lenders consider. The more you earn, typically the higher your borrowing power. Regular, stable income sources will typically mean a higher borrowing power.

2. Expenses: Lenders assess your expenses to ensure you can comfortably manage mortgage repayments while maintaining your lifestyle and any pre-existing financial commitments. Keeping your expenses in check can positively impact your borrowing power.

3. Liabilities: Debts like credit card limits, personal loans, child support, HECS, and car loans/leases can reduce your borrowing power. Paying off or minimizing debts, or closing credit cards before applying for a home loan can help boost your borrowing power.

4. Credit History: A healthy credit history demonstrates your reliability in repaying debts, which can positively influence your borrowing power.

5. The number of financial dependents you have – the more financial dependents you have the lower your borrowing power as this will impact your household living expenses.

Tips to Boost Your Borrowing Power

Looking to increase your borrowing power? Here are some tips:

1. Increase Your Income:

One way to boost your borrowing power is to increase your income. You should consider ways to increase your income, such as negotiating a pay rise, or even investing in education or training to enhance your career prospects.

2. Reduce Expenses: 

Trim unnecessary expenses from your budget to show lenders that you can manage your finances responsibly. This could include cutting down on dining out, reducing your number of subscription services, or cutting out unnecessary purchases.

3. Clear Debts: 

Pay off outstanding debts or consolidate them to reduce your overall liabilities. This not only improves your borrowing power but also helps you save on interest payments in the long run.

4. Save for a Larger Deposit:

Increasing your deposit size will reduce the amount you need to borrow. Aim to save as much as you can for a sizable down payment, which can potentially help you secure a more favorable interest rate.

5. Improve Your Credit Score: 

Maintain a healthy credit score by ensuring you pay bills on time, keep credit card balances low, and avoid unnecessary credit inquiries. A strong asset position can also make you more credit worthy, so take stock of your assets, including savings, investments, and existing properties. A higher credit score can enhance your borrowing power and make you more attractive to lenders.

6. Take out a longer term of home loan:

By taking out a home loan over a longer period of time, it will decrease your repayments and could increase your borrowing capacity. But it’s important to understand all aspects of a home loan to ensure you take out a home loan that best suits your needs and capacity to repay your home loan so that it is paid off by retirement.

Qantas Money Home Loans Borrowing Calculator

The Qantas Money Home Loans borrowing calculator* is a handy tool that allows you to estimate your borrowing power quickly and easily. By entering details such as your income, expenses, number of dependents and liabilities, you can get an instant snapshot of how much you may be able to borrow from Qantas Money for your home loan.

Using the calculator, you can experiment with different scenarios, such as adjusting your income or reducing your expenses, to see how they affect your borrowing power. This can help you make informed decisions about your finances and plan for your future home purchase.

Remember, while borrowing power calculators provide useful estimates, they're just a starting point. Factors such as lender policies, interest rates, your credit history and your individual verified financial circumstances can all impact your eligibility and amount you can borrow. You can always speak with a Qantas Money Home Loans specialist while you’re doing your research to discuss your lending needs and options.

Increasing your borrowing power by focusing on boosting your income, reducing expenses, clearing debts, and improving your financial health overall, can strengthen your position and enhance your chances of securing your home loan. The Qantas Money Home Loans borrowing calculator is designed to assist you in understanding your borrowing power and get you closer to purchasing your new property. 

This information has been prepared without considering your objectives, financial situation or needs. You should consider your circumstances before acting on this information.

Credit is provided by Bendigo and Adelaide Bank Limited ABN 11 068 049 178 AFSL/Australian Credit Licence 237879. Eligibility criteria, fees and charges and T&Cs apply. This product is only available for Qantas Frequent Flyer members. Credit criteria, fees and charges apply. Based on Bendigo and Adelaide Bank Limited’s credit criteria. This product is only available to Australian residents who are Qantas Frequent Flyer members. A joining fee may apply. Membership and the earning and redemption of Qantas Points are subject to the Qantas Frequent Flyer terms and conditions. Please refer to qantas.com/terms for a copy.

*The results are a guide only. They are not a quote, credit approval or offer of credit. The results are not advice on how much you can or should borrow, which product you should choose, the product features or options, or about making extra payments. The ranges of rates, terms and loan amounts in the calculator may not be available for products offered by us or other credit providers. Credit providers have different credit criteria and there may be other factors which affect whether you qualify for credit and the amount you could borrow. The results assume regular scheduled payments and that the interest rate does not change, and do not include any discount period. Interest rates are subject to change except during a fixed rate period. The rates and repayment amounts do not include any monthly service fees or lenders mortgage insurance if applicable. You will receive a formal assessment when you begin an application, and enter the specifics of the property, your loan type, personal details and your financials. Find out more about our eligibility criteria here.