3 Tips to Borrow More
Borrowing money in Australia isn’t always easy. The amount lenders are willing to loan you depends on a lot of factors, so getting a grip on your borrowing capacity is the first step you should take.
Knowing the amount that lenders are willing to offer you can help you make an informed decision when applying for a loan.
Fortunately, there are some simple steps that you can take to improve your borrowing capacity and increase your chances of getting approved for the loan amount that you need. These may seem like obvious fixes, however, the trick is to not shrug these off. By committing to some basic steps, you’ll be on the right track to getting the loan you need.
1. Boost Your Savings
Saving money may seem like a tough nut to crack, but there are a few ways for you to get things on track.
It may seem boring, but the number one thing to do is to figure out how much money you’ve got coming in and how much is going out – in other words, a budget.
Budgeting apps make this easy. Simply tracking your expenses but writing them down can help you monitor where your hard-earned money goes. Automated transfers to dedicated savings accounts can brew a consistent saving habit.
There’s a heap of free and efficient budgeting tools available online to help you make sense of where your money is going: your income, expenditures, and potential savings. Without some sense of a savings plan, you’re undermining your goals.
Need a bit of motivation? Try rewarding yourself whenever you reach a certain goal, like ordering takeout from your favourite restaurant if you hit a milestone amount of savings. Being savvy with your funds doesn’t have to be another task; with a simple google search, and by downloading one app, you can stay focused on the end game.
2. Fix it! Your credit score
Achieving a good credit score is a great milestone in life and can make a world of difference when it comes time to make your loan application. Whether you want to purchase a brand new car or snag a low interest rate on an expensive home loan, investing time into improving your credit score is one of the best investments you can make.
Regularly meeting your credit card bills, loan repayments, and other debt obligations can enhance your credit score, making you a more favourable candidate for lenders. Begin by obtaining your credit report and making sure there aren’t any errors.
Employing a mortgage broker during the loan application process can further improve your chances—they leave no trace of a credit check, ensuring your credit score remains unaffected.
3. Reduce it! Your Debt-to-Income Ratio
We know, what the heck is your debt-to-income ratio?
Simply put: how much money you owe, relative to how much you make.
If you’re making $7000 a month, and you already owe too much of that to credit card repayments, a car loan, a personal loan or whatever it is, a lender isn’t going to be willing to let you take on more debt.
To better this scenario, prioritise clearing high-interest or overdue balances first, then progressively pay off other debts with larger payments.
You can also consider shifting any revolving debt over to instalment loans, as this increases certainty for lenders that the debt will be paid down in a timely manner. All these steps can lower your overall DTI and give you more freedom when it comes to taking on new credit. Taking control of your finances and making conscious effort towards lower debt levels is crucial for your long term goals.
Commit
Improving your eligibility for a loan is achievable—it begins with making a commitment to tidying up your existing financials. If you’re eyeing a substantial loan for a significant business purchase, or to get the keys to your dream home, it’s best to start budgeting immediately.
Taking charge of your finances may seem intimidating initially, but it pays off in the long term—leaving you with more money for what truly matters in your life and business.
