What kind of borrower are you?
While you may think of yourself as a good candidate, the banks may not see you in the same light.
Here are 4 different ways you could be sabotaging your borrowing power without even realising it:
#1: Having too many credit cards with high limits
There’s nothing wrong with having credit cards – as long as you’re paying them off in full every month.
If you can’t afford to do that, you can’t afford to have credit cards. Dead simple.
But there’s more to it than that…
When lenders review your home loan applications, they look at your credit card limits.
That’s right, the limits, not the balances.
Reduce the number and limits of credit cards to see your borrowing power soar overnight.
#2: Being a tardy bill player
Nobody’s perfect, and we all forget our bills from time to time.
But let’s be realistic: paying bills late doesn’t look good.
Lenders will wonder, that since you can’t keep on top of your bills, how on earth will you meet a mortgage repayment?
To make things easier, consider setting up automatic payments for regular bills. This helps make sure your financial paper trail is as squeaky clean as possible.
#3: Having too many personal loans
Too many personal loans will significantly reduce your borrowing power.
When lenders see you have a “thing” for personal loans, it gets them thinking…
- “This borrower can’t save money, there’s no way I’d lend to them”
- “He’s living beyond his means… there’s no way that he’d be able to afford repayments”
- “You must be using your personal loans to pay down your bad debt…”
You absolutely want to avoid this. If you have personal loans, get rid of them fast!
#4: Changing jobs or becoming self-employed
The days of having one job your entire life are over.
Not only is technology creating new jobs daily, the world that we live in means that job mobility is also more common.
It’s important to remember that lenders will also look at your employment history. If you change jobs regularly, they’ll worry about your ability to pay your mortgage.
The same can be said for the self-employed… at least in the beginning.
Lenders are often concerned about the sustainability of income when people first become self-employed.
The good news – once you have a few tax returns under your belt, lenders will be more willing to chat about borrowing.
But not all is lost…
Realised your financial footprint is not as squeaky clean as it could be?
Get in touch with the experts at Adpen. We’d love to support you in kickstarting or rebooting your borrowing power.