If you are like most investors, your borrowing capacity will have a major impact on the growth of your portfolio. Your budget for each purchase will usually be highly dependent on how much money you can access. And your ability to take out further loans will dictate whether you can buy further investment properties.
But no matter how successful of an investor you are, there is a limit to how much you can borrow. So, what happens when you have reached your capacity and cannot borrow more? How do you keep your investment growing and continue making progress toward your goals?
How your borrowing capacity is calculated
When assessing a mortgage application, there are three key factors mortgage providers consider:
While every lender will look at these measures, each will have their own rules for how they calculate borrowing capacity. Some will weight certain factors, like serviceability, more heavily than others, and some will largely overlook an applicant’s credit score. As such, it can be difficult to accurately estimate exactly how much finance you will be able to access.
Tips for increasing your borrowing capacity
If you have reached your borrowing capacity, or are near to it, it will be difficult to find further finance. Thankfully, there are a few things you can do to boost your borrowing power. This includes:
Want more information?
If you would like to discuss other ways to optimise your borrowing capacity, give Search Party Property a call. We work with many of the country’s leading financial advisors and specialise in helping investors maximise their returns. To start this conversation, schedule your free property investment assessment session today.