Cracking the Code: Boosting Your Borrowing Power in 2025

The property market in 2025 presents a unique set of challenges. While we're seeing a welcome slowdown in house price growth and an increase in available properties, the rising cost of living and higher interest rates are making it tough for aspiring homeowners. As the head broker at Sutherland Mortgage Group, I want to share some practical strategies to help you boost your borrowing power and make that dream home a reality.

The 2025 Landscape: A Balancing Act

We’re all watching the cash rate closely. A decrease might seem like a magic bullet, but it could also fuel demand and push property prices up again. So, what’s the answer? Be proactive. Don't just wait for the market to shift; take control of your financial situation.

Stuart’s Tips for Boosting Your Borrowing Capacity:

1. Early Bird Gets the Loan:

Engage Sutherland Mortgage Group as your Brokers early in the process. We can assess your current borrowing capacity and identify areas for improvement. For example, clearing a HECS debt is likely to increase your borrowing capacity, as does paying out car loans, or closing credit cards.

2. Tax-Savvy Planning:

If you're self-employed, let's work with your tax advisor. Drafting some tax returns early allows us to see how your declared income impacts borrowing capacity. Claiming too many deductions might reduce your taxable income but can also hurt your loan prospects. We can find that sweet spot. Also, review your payslips for salary sacrificing and pre-tax deductions – these can sometimes be adjusted to improve your borrowing power.

3. Good Financial Habits Matter:

Banks scrutinize your financial behavior. High credit card limits and frequent use of Buy Now Pay Later services raise red flags. Pay bills on time, reduce credit limits, or switch to a debit card. Consistent savings and responsible spending habits are key.

4. Income Boost, Borrowing Boost:

Increasing your income is a sure-fire way to enhance borrowing capacity. Consider a pay rise, extra hours, or a side hustle. But be cautious – banks prefer to see a two-year history for side hustle income.

5. Rent Smart, Save More:

High rent makes saving difficult. Explore cheaper rental options to free up cash. Treat your rent as a mortgage repayment trial. Once you know your borrowing potential, set aside the difference between your rent and projected repayments.

6. Guarantor Support:

If saving a deposit is a hurdle, a guarantor loan might help. Remember, this is a serious commitment for everyone involved and we can help you navigate this strategy.

7. The Long Game: Longer Loan Terms:

A longer loan term can lower repayments and boost borrowing power, but you'll pay more interest overall.

We can prepare these calculations and comparisons for you.

8. LMI: A Stepping Stone:

Lenders Mortgage Insurance (LMI) can get you into the market sooner, but it comes at a cost. We can calculate the LMI against potential price increases and rent paid while saving for a larger deposit. Certain professions also qualify for LMI exemptions - such as those in the medical, teaching and legal industries. Contact me to learn more.

9. Borrow Within Your Means:

Just because a bank approves a certain loan amount doesn't mean you should borrow it. It’s crucial to borrow comfortably and avoid financial strain. At Sutherland Mortgage Group, we ensure responsible lending practices and encourage clients to carefully consider their own budgets.

Ready to Take the Next Step?

Navigating the property market requires a strategic approach. We are here to help you.

Contact me today for personalized advice and let us help you unlock your borrowing potential and achieve your 2025 Goals.

Disclaimer: This article provides general information only and does not constitute financial advice.