Buying a home is one of the biggest financial decisions most people will ever make. But before you start attending inspections or chatting to real estate agents, there’s one crucial thing to sort out: how much you can actually borrow. And while lenders make that call, there are several steps you can take to influence their decision in your favour. With a little preparation and some strategic thinking, you can increase your borrowing capacity and open up more opportunities when it comes time to make an offer.
Understand What Lenders Are Really Looking At
When a bank or lender considers your loan application, they don’t just glance at your income and savings. Instead, they dig into your entire financial profile—your income, spending habits, existing debts, assets, employment history, and even how many credit cards you have.
One of the most important figures in this process is your debt-to-income ratio (DTI). This is a measure of how much of your monthly income is already committed to repayments. A lower DTI signals to lenders that you’re not overextended and have room to take on more debt. Keeping this ratio in check can significantly improve how much you’re allowed to borrow.
Reduce Unnecessary Debt Before You Apply
One of the simplest, most effective ways to increase your borrowing power is to reduce or eliminate existing debt. Personal loans, car finance, buy-now-pay-later accounts, and even unused credit card limits can all drag down your borrowing capacity.
Even if you’re not using your credit card much, lenders will often assess your full credit limit as if it were fully drawn. If you’ve got a few cards with high limits you rarely use, consider lowering the limits or closing the accounts altogether. It’s a small move that can make a big difference.
Consolidate Your Spending Habits
In the months leading up to a loan application, your day-to-day spending matters more than you might think. Lenders now scrutinise your bank statements to get a real-world picture of your financial behaviour. That means those frequent takeaway orders or impulse purchases can actually hurt your chances.
Try to develop more disciplined spending habits. Track your monthly expenses, cut out unnecessary subscriptions, and avoid major discretionary spending. A clearer savings pattern and leaner spending profile can help show that you’re a responsible borrower.
Increase Your Income (If You Can)
This won’t be an option for everyone, but if you have the ability to take on additional work, boost business income, or apply for a raise, even a modest increase in your income can expand your borrowing limit.
If you’re self-employed, make sure your financial records are up to date and show consistency. Lenders tend to prefer at least two years of solid income history, so the clearer and more consistent your books are, the better.
Consider Applying as a Couple or Co-Borrower
Applying for a home loan with a partner or co-borrower can significantly increase your borrowing power, as both incomes are assessed. That said, lenders will also consider both sets of expenses and debts, so it’s worth doing the maths to ensure it really helps.
If one applicant has strong income but poor credit or high debt, it may actually hurt the application. That’s why it’s crucial to understand how your combined finances will be evaluated—and speak to a professional before jumping in together.
Tidy Up Your Credit Report
Before you submit your application, request a copy of your credit report from one of Australia’s credit reporting agencies (like Equifax or Illion). Look for any errors or outdated entries—sometimes old defaults or closed accounts remain listed and could be dragging your score down.
If your score is lower than expected, it might be worth delaying your application for a few months to rebuild it. Pay all bills on time, reduce your credit limits, and avoid applying for new credit products during this period.
Choose the Right Loan Structure
The way your loan is structured can also influence how much you’re allowed to borrow. For instance, choosing an interest-only loan (for a period) or opting for a longer loan term can reduce your monthly repayments, increasing your theoretical borrowing capacity. Of course, this can also mean paying more interest over time, so it’s something to weigh carefully.
A good mortgage broker can walk you through these scenarios and help you find a structure that matches your goals—not just your limits.
Work With a Professional Who Knows the Market
If you’re serious about increasing your borrowing power, working with the best mortgage broker Sydney has to offer can be a smart move. An experienced broker won’t just help you find the right lender—they’ll understand how different banks assess your profile, what documentation you’ll need, and what tweaks could help strengthen your application.
They can also negotiate with lenders on your behalf and help you navigate pre-approval, so you’re in a strong position when the right property comes along.
Final Thought: Prepare Early, and Don’t Rush It
Boosting your borrowing power doesn’t happen overnight. It takes planning, discipline, and a clear strategy—ideally started at least three to six months before you apply. Whether it’s cutting back spending, tidying up your credit, or working with a broker to tailor your application, small actions now can unlock much better results later.
Buying a home is a big deal—but with the right preparation, you’ll be ready to borrow smart and buy with confidence.
