When you are trying to decide on a home or a property to invest in, one thing you should think about is your borrowing capacity. Your borrowing capacity is the maximum amount that you can spend on a mortgage. Your capacity to borrow will vary from lender to lender and is dependent on your income and credit history. However, there are steps you can take to increase your borrowing capacity, and here are five ways to do it.

Quick and Easy Ways to Increase Your Borrowing Capacity

1 – Reduce your debts

The first step to increasing your borrowing capacity is to pay off as many debts as possible. Debts are like anchors that can weigh you down and keep you from achieving your goals, such as buying a home. By paying off as many debts as possible, you can improve your credit score and increase your borrowing capacity. When you apply for a mortgage, lenders will take a look at your credit score, and if it is low, it can decrease your borrowing capacity.

2 – Reduce excess credit limits

One of the first steps that lenders will take to determine your borrowing capacity is to look at the amount of money you are currently using. If the amount of money that you are using is more than the amount of money you are earning, you will decrease your borrowing capacity in the long run. However, by reducing the excess credit limits on your credit cards, you can reduce the amount that is being used and your overall credit usage. Low credit usage will indicate to lenders that you have created a healthy habit of managing your money, and it can increase your borrowing capacity.

3 – Organise your financial affairs

Lenders want to see that you are in control of your financial affairs. If you have debts and aren’t able to pay them, lenders will not be as inclined to help you borrow money. Organising your debts and ensuring that you have a healthy budget will show lenders that you are in control and can handle a mortgage payment. If you can show that you can handle your finances, lenders will be more likely to lend you money.

4 – Take a longer mortgage term

If you are in a position where you can afford a lower monthly mortgage payment, then a longer term mortgage will reduce the monthly payment. While a longer term mortgage can result in higher overall interest costs, it is a good way to reduce your monthly payment and increase your borrowing capacity. If you want to reduce your monthly payment, you can also consider paying your mortgage off faster to reduce overall interest costs.

5 – Save more money for your deposit

If you have a small amount saved for your down payment, it can be difficult to get approved for a mortgage. While you don’t need to save the full amount of your down payment from getting approved, you should have a significant amount saved up—the more money you have saved up, the more borrowing capacity you will have.


If you are trying to buy a home, it is important to save money and prepare financially. By following the steps above, you can increase your borrowing capacity, which will allow you to buy a home. After following these steps, contact a local mortgage broker to start your home purchasing process.

Once you are ready to take out a loan, come to Mortgage Broker Home Loans. Our Mortgage Broker Home Loans specialist is for clients around Mornington Peninsula. We will be happy to give you a free, no-obligation quote for your new mortgage requirements. Get access to nurse home loans today!