Lenders put limits on your borrowing power for good reason. It’s in their best interest – and yours – that you can actually afford to repay the debt.
But once you’ve done your budget and know what you can afford to borrow, how do you ensure your lender will be on the same page?
Your Investment Property magazine offers these tips to maximise your loan serviceability.
- Get rid of your credit cards. Lenders will see your combined credit limits as a liability.
- Consolidate unsecured debts. If you have equity in an existing property, wrap your credit card and personal loan debts into your mortgage to reduce your interest rate.
- Extend your loan term. You’ll pay more interest over the long run, but reduce your repayments freeing up more cash to service a new loan.
- Provide proof your liabilities are shared. This could improve your personal serviceability outcome.
- Shop around. There are many different types of lenders and loans available these days so see your broker.
Make sure you talk to your financial advisor or mortgage broker to get advice that is suited to you.
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