How Can You Boost Your Borrowing Potential and Buy a Home?
Have you looked at house prices and your salary, and thought that you’ll never be able to afford to buy your own home? The typical amount you can borrow is usually around 4.5 times your salary. If you have two incomes to contribute, sometimes these are counted in different ways. But even with that multiplier, it can seem like buying a home is out of your reach. You may need to boost how much you can borrow to get the home that you want. So how do you do that? You could use a few different methods, some of which might be easier than others.
Get Someone Else to Help
Friends and family can help you to boost your borrowing potential if they’re willing to. There are a couple of options to make this happen. Some lucky people might have relatives who can contribute towards their deposit, but this has to be a gift and not a loan. You can also consider a guarantor mortgage or a “joint borrower, sole proprietor”, where someone else’s salary could be taken into account. However, you’ll have to meet specific criteria, so it’s important to check whether it’s an option for you. Of course, buying with a partner or even a friend or sibling can also allow you to borrow more.
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Work on Increasing Your Salary
It might not be the easiest option, but a higher salary translates to higher borrowing power. It’s the simple truth that if you earn more, you can most likely borrow more on your mortgage. If you want to increase your salary, you can consider going after a promotion or looking for a new job. Just keep in mind that if you change jobs, mortgage lenders might want you to have been in that job for a certain amount of time before they’re willing to approve you for a mortgage.
Grow Your Deposit
Your earnings aren’t the only important factor in how much you can borrow for a mortgage. The size of your deposit is another key part that mortgage lenders will take into account. Saving up can be tough, but it’s worth it if you can get a decent deposit together. A larger deposit doesn’t directly affect how much a lender is willing to give you, but it can put you in a more secure position. You can either increase your budget or put down a larger percentage of the total cost of the home, which can put you in a more favourable borrowing position.
Improve Your Credit Profile
When lenders look at your credit history, they’re not really just looking at the number that is your credit score. Apart from the fact that this number is different with different credit agencies, it doesn’t tell them all they need to know. They will also be taking a closer look at your debts and your payment history. Improving your credit profile by paying off debts and dealing with any issues can really help you.
Boosting your borrowing power isn’t always as simple as you might like it to be, but it could help you to get the home you want.
