Professionals Real Estate 
Many individuals don’t really know how much of a loan they may be able to qualify for. They are curious as to what would be the maximum amount they might be able to borrow, which is technically referred to as their “borrowing capacity” by the lending institutions. A lot of people aren’t sure what kind of information they need to supply to the lenders to be able to determine this.
Your present financial situation:
One of the biggest factors that will affect your borrowing capacity is your present financial situation. This will include how much money you have coming in and how much you have to pay out or what your debt is.
If you are thinking about applying for a loan you want to be in the best financial position possible in order to qualify for the maximum amount that you need. In order to do this then you want to enhance your borrowing capacity.
Your financial contribution to your new home purchase:
Banks like to see what kind of financial responsibility their borrowers possess. The more money you have to put down as a deposit on your home purchase the better, for a few reasons: One it will cut down on the amount of money you need to borrow, but just as importantly it shows the lenders that you made a commitment to saving.
Reduce your current debt:
When you are borrowing for a home purchase you are technically incurring more debt. You want to keep your debt obligations to a minimum to make it financially easier on you. Lenders know the hazards of having too much debt to deal with, so when you are approaching them for a home loan they will take your present debt obligations into account. You can put yourself in a better financial position by clearing off as many of these debts as possible prior to making your loan application. Attempt to clear off your credit cards, and car loans or other personal debts you have incurred.
Fixed loans are advantageous:
You will know exactly what your new borrowing costs are going to be with a fixed loan. The payments stay consistent and it helps to increase your borrowing capacity because your expenses don’t fluctuate.
Keeping your expenses in control:
By having a budget it means you are more aware of your expenses, and allows you to focus on areas where you can reduce them. Every day expenses such as groceries and utilities are ongoing expenses but being aware of where you can reduce them will help you to appear more stable financially and makes you appear as being in control of your finances, putting you in a better light with your lenders.
Income is important:
You may be making enough income to make ends meet, but it is far more to your advantage to be able to show there is surplus money left over after all your financial obligations have been met. This makes you look more financially secure in the eyes of the lender. In order to achieve this you may have to consider taking on an extra job to provide additional income, or take advantage of over time at your present place of employment.
Don’t just assume you have a good credit rating:
You may have stayed up to date with your payments, and never neglected to pay off a loan. So you just assume this good credit pattern is going to appear on your credit check. Mistakes can be made on these and you need to know if this is the case. Check your credit rating before your proceed with your loan application and clear up any negative aspects that may appear there.
Be financially organized:
You are going to have to be knowledgeable about your finances when you apply for your loan. Make sure the information you provide about your income and expenses is truthful and accurate. The more documentation you have to support your financial habits the more effective it will be at increasing your borrowing capacity.
