I don't   know if you've applied to a bank for a loan recently, but you'll likely find the goal posts aren't where they were last time.   This has certainly happened before, things like removing some lending products, tightening of lending policies, new rules, etc.   A nuisance, but there are several ways to break through the lending ceiling.

In the end, it's all about serviceability, affording a loan based on assets, income, and savings.   There is a study where 22 mortgage lenders were given the same information.   A couple would not lend, but the amounts where loans would be granted varied between $470,000 to $550,000.   So, it pays to look around as the days of being totally loyal to a bank are over (and vice versa!) and this is why brokers have become dominant.

If you don't have a broker, there are a few we are happy to recommend (because they are experienced, capable and caring - please note, we don't receive commissions; ever! )   We also use specialist brokers for asset loans - vehicles, equipment, and working capital.   For equipment, it's not only the interest rate but charges, exit fees, the term, their preferred customer, etc.

Here are seven effective strategies to boost borrowing capacity, particularly for home or investment loans, but also useful for purchase of business assets:

1) Get credit cards under control

Lenders assume cards will be 100% maxed out, so cancel some if you don't use them often.

2) Be diligent with your financial records

You have to prove income, so have financial records up to date, lodge tax returns early (payment is not normally due until May the next year), have a number of years to show (preferably two).   Consider a forecast if circumstances are improving - this is not proof of income, but could show ability to repay.

3) All lenders don't treat income equally.

Different sources of income can be treated differently - second jobs, child maintenance, company profits, government benefits, rents, how long you've been in business.   Most brokers use around 30 lenders and know what each prefers.

4) Get rid of extra debt

Lenders are wary of unsecured debt like personal loans, store cards and credit cards.   You can roll these into your mortgage if there is enough equity, but you should then pay more than the minimum each month so you make headway on paying down debt.

5) Look for package deals

Lenders sometimes offer promotional rates and deals, which can save you (that's a good slogan!).   Another good reason to use a competent broker.

6) Boost your savings

Lenders want better numbers, so build up your deposit, or pay down your current loan, or use an offset account.   Even if you don't want a loan now it is a good habit and ever so helpful when you enter the lending maze.

7) Loan terms

Most loans are for 25 or 30 years, but a few lenders even offer 40 years.   Longer terms mean lower repayments but at the cost of more interest paid over the life of the loan.   Make extra payments, pay occasional lump sums, pay fortnightly instead of monthly (all of these can save years on the term).   One of the 'rules of thumb' is for monthly payments to be as close to $12 per $1,000 of the loan.   For example, a $300,000 loan over 25 years at 5% requires $1,755 p/m, but the loan will be extinguished in only 12 years at $3,600 p/m.

Lenders always want good business, so help them to help you by boosting your borrowing power.   And, if you'd like an introduction to a capable broker, for a loan now or even to see what is possible, please call me.