Understanding your borrowing capacity is essential when applying for a home loan. Having a specific figure in mind when searching the property market for the perfect home can help weed out those outside of your financial means and leave you with the best of the bunch. 

If you've found that your borrowing capacity isn't as high as you would have hoped, there are a number of ways to boost this figure. 

Take care of outstanding debts

One of the things taken into consideration by lenders when they're looking into your home loan application is your credit rating. This can affect your loan outcome in a number of ways and having outstanding debts works against you. 

Taking steps to pay off or reduce any outstanding credit card balances or personal loans will help put you into a stronger financial position and hopefully alter the amount of money you're able to borrow towards your real estate goals. 

Choosing the right home loan product

Depending on the type of mortgage you're hoping to secure, there will be variations between the amount of interest paid as well as different loan features. Be sure to discuss your situation with a financial expert to understand what the best home loan is for your needs. 

For most first home buyers, it would be recommended to take on a fixed-rate home loan. More experienced buyers like property investors could open their options out to things like variable-rate or interest only home loans. 

Save up before approaching a lender

Having a good reserve of savings behind you can help your situation by highlighting the fact you have a built up source of wealth that could be used towards your property goals. 

You can contact a Smartline Mortgage Adviser on 13 14 97 for home loan advice. Or complete our call request form and we'll call you!

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DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.