Category: Buying a House, Mortgages (General), Remortgaging
Jun 21, 2023
How to maximise your borrowing capacity when getting a mortgage, you can consider the following strategies:
- Improve your credit score: Lenders in the UK use credit scores to assess your creditworthiness. A higher credit score generally leads to better borrowing terms. To improve your credit score, make sure you pay bills on time, reduce outstanding debts, and correct any errors on your credit report.
- Save for a larger deposit: Lenders typically require a deposit for a mortgage. Saving for a larger deposit can increase your borrowing capacity because it reduces the loan-to-value (LTV) ratio. A lower LTV ratio is seen as less risky by lenders and can result in better borrowing terms.
- Minimize existing debts: Lenders take into account your existing debts when assessing your mortgage application. To maximize your borrowing capacity, consider paying off or reducing your outstanding debts. This can improve your debt-to-income ratio and make you appear more financially stable.
- Increase your income: A higher income can positively impact your borrowing capacity. Consider ways to increase your income, such as taking on a second job, negotiating a raise, or acquiring additional qualifications or certifications that can lead to higher-paying job opportunities.
- Consider joint applications: If you’re applying for a mortgage with a partner or spouse, a joint application combining both of your incomes can increase your borrowing capacity. Keep in mind that both applicants’ credit scores and financial situations will be considered.
- Minimize unnecessary expenses: Review your monthly expenses and identify areas where you can cut back. Lenders assess your affordability based on your income and outgoings, so reducing unnecessary expenses can improve your borrowing capacity.
- Get professional advice: Consulting with a mortgage broker or financial advisor can help you understand your options and find the most suitable mortgage product for your circumstances. They can guide you on maximizing your borrowing capacity and provide valuable insights into the lending landscape.
Remember to maximise your borrowing capacity when getting a mortgage is important, it’s equally crucial to ensure you can comfortably afford the mortgage repayments. Assess your budget and consider your long-term financial goals before taking on a mortgage.
Your Home Maybe Repossessed If You Do not Keep Up The Repayments On Your Mortgage