Want to increase your borrowing power by $100K?
Many first-home buyers just can’t quite afford the property they want in Sydney and Melbourne. People seeking to buy in the inner-city suburbs that are well serviced by public transport should think about ditching the car.
Maybe your car commitments are stopping your home aspirations. A relatively small car debt limits the extra capital that is often needed to buy in Sydney or Melbourne. Inner suburbs have good transport links which are continuing to improve, and car costs may be the last area that couples can change to get the loan size that they need.
By reducing your everyday expenses and any credit card limits, personal loans or car loans you can increase your borrowing power substantially.
The effect of paying out car loan and reducing credit card limits by a couple on their borrowing capacity could lead to a further $100,000 being available:
|Couple’s Income||Car Loan||Credit Card Limit||Borrowing Capacity|
|$120,000 per annum||$20,000||$10,000||$550,000|
|$120,000 per annum||—||$5,000||$650,000|
The couple’s increased borrowing power could allow them to afford that property they have always wanted but could not previously afford.
They exchanged only $20,000 of car loan debt for $100,000 worth of home loan borrowing power.
General Advice Warning
We do not guarantee that the information in these articles is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.