Buying your dream home is often fraught with tight requirements. It is better to make your loan application attractive when it comes to the lender’s assessment. You can explore monthly payments, your borrowing amount, the interest rates, and the duration of the payment of mortgage. This can help you compare different lenders and make your choice easier. You can also use a home loan calculator to give you estimates. However, it all depends on your borrowing capacity.
An increased borrowing capacity is beneficial to anyone who wants to ensure a good return on investment. There are several factors involved – your income and commitments, lifestyle and expenses, your credit history, property deposits, loan type and terms and interest rates, your assets and the value of your property.
Having understood these factors, here are some tips to help you increase your borrowing capacity.
Do extensive lender research
Lenders operate in different ways when it comes to income. Some allow share capital as income while others do not. So, it is very important to do your research first and take a look around for a lender that can serve you best.
Healthy credit history
Having a good credit history can also increase your borrowing capacity. Paying your bills on time says a lot about you being a responsible borrower.
Consolidate your debts
Consolidating all your debts into a single loan simplifies your payments. This helps with your budgeting and allows you to refinance at a better rate. This is also a good sign for potential lenders.
The assessment of your application can be improved when you include proofs of bonuses that you receive and other income generated from your investments.
This may vary from lender to lender, some can give you the benefit of a larger mortgage in exchange for a negotiated share of profits. When you consider shared equity, you can borrow money more easily. With rising prices in the market, having a co-owner can help you buy rather than struggle to come up with a bigger deposit.
Your savings for at least three months are usually required by lenders before the approval of your loan. More importantly, making a 20% deposit prevents you from paying Lenders Mortgage Insurance.
Do you have other ideas on how to increase your borrowing capacity and home loan comparison? Share your insights in the comments section.Read More →