Clever Ways To Get More Money From The Banks

Have you ever wondered how the banks decide how much you can borrow?

And more importantly, how can you ‘twist their arm’ and force them to lend you more?

If you think there’s a secret formula to figuring out how much you can borrow, and it involves a cauldron and someone reading tea leaves along the way … you wouldn’t be far wrong. 

Thankfully the witchcraft isn’t used any longer, but the calculations are still pretty complex. 

And it comes down to calculating one factor called serviceability.

What Is Serviceability And How Does It Let You Borrow More?

Serviceability is the bank’s assessment of your ability to ‘service’, or repay a loan. 

The more serviceability you have, the higher repayments you can make, and the more they’ll let you borrow. 

And that’s what their calculations work out, based on their criteria which is different for each bank. 

By maximising your serviceability, you can borrow more money and build a property portfolio faster. 

How To Increase Your Serviceability … And Borrow More.

Ultimately, everything comes down to your income … and your expenses. 

But the good news is, these aren’t fixed. 

Not by a long shot. 

Here are some ways you can play the game and increase your borrowing power. 

1. Pay Off Bad Debts.

Bad debts like credit cards, car loans, store finance and personal loans are like a chain around your neck. 

These are often very high interest loans, and drag your serviceability down considerably. 

A few hundred dollars in payments here, a couple of hundred there and it can have drag your borrowing capacity down by tens, even hundreds of thousands of dollars. 

That’s why you should do everything in your power to pay off bad debts ASAP. 

And once you’ve paid off as much as you can, consider consolidating the rest into a lower interest loan to be repaid over a longer period. 

Of course, do the sums on this but it could be a smart move. 

2. Cut Up And CANCEL Those Credit Cards 

You might celebrate when you pay off your credit card, and you should because it’s a big achievement. 

But the banks don’t care. 

They figure, if you’ve still got a card then you could max it out. 

So if it’s a $5,000 credit card, the banks will base their numbers off you having used up the whole lot. 

So repay, then CANCEL those suckers. 

And on this topic, be careful about some store credit facilities too because a lot of them allow you to reborrow up to the maximum limit again. 

The banks are on to these as well. 

3. Review And Reduce Your Expenses

The banks are like expense detectives these days. 

They’ll go through your statements like a hawk. 

And if you say your monthly expenses are one thing, and they check your statements (which they will by the way) and they’re higher, you’re going to be in trouble. 

It’ll be obvious anyway because they’ll see how fast you’re saving money, and work out how much you’re spending. 

Realistically, the only thing you can do is to slash your expenses. 

And that’s a good thing anyway because you’d be surprised how much you can save by switching monthly expenses to yearly, or eliminating some subscriptions altogether. 

Stop using UberEats and go drive to get your meal. 

Or better still, cook at home!

You can uncover quick and easy savings by reviewing your insurance and utility bills.

And a smart move is to set up a savings bank account and transfer money into it automatically from your pay. 

The less you spend, the more you save.

And the more you can borrow. 

4. Negotiate A Better Interest Rate

It doesn’t matter how good your interest rate is when you first get a loan, they have a habit of creeping up over time. 

So watch the loan market carefully, and if you’re paying too much you’d be surprised how a quick phone call or visit to a branch can save you. 

You might even be wise to talk to a mortgage broker who can assess your loans to find you a better deal. 

And if you have other debts like a credit card, store finance or a car or personal loan, you might be able to roll them all into one and reduce the interest you’re paying. 

They typically don’t charge for their services, so it’s a good idea to ask one and find out what your options are. 

And if you have to switch banks for a better rate, do it. 

5. Get A Pay Rise

Yeah, I know. 

What boss is going to give you a pay rise?

But if you never ask, you’ll never get one. 

You might be surprised what you get just by asking. 

If nothing else, you can find out what you need to achieve to get a higher pay, and focus on that. 

And remember that in many large organisations, the more qualifications you have, the higher your salary. 

Another way to increase your income is to make some money with a side hustle. 

From making and selling goods at a local market, to running an eCommerce store, there are plenty of ways you can create an extra income stream.

6. Keep Your Credit Score Squeaky Clean

Did you know you have a credit score?

It’s a number out of 1,000 which is calculated based on how much you’ve borrowed, your repayment history and how many credit applications you’ve made.

The higher your score, the more money the banks will lend you. 

And this is why it’s important to keep paying your bills on time.

Also, if you get into trouble with any repayments then make sure you set up an arrangement with anyone you can’t pay on-time.

As long as you stick with your arrangement it typically stays between you and your lender. 

No credit reporting involved. 

So listen, there are plenty of places you can get a copy of your credit report, along with a regularly updated score. 

Just google it. 

Make sure you know what’s in there before going to the banks because if there are any problems, you can fix them up before the banks even see it. 

7. Use Income From An Investment Property To Your Advantage

If you have a rental property, make sure you’re getting the maximum rental income. 

Keep it neat and tidy and well maintained. 

And keep up to date on what similar properties are renting for so when it comes time to renew the lease, you get paid the right amount. 

Also, as I mentioned a moment ago, make sure you’re getting the best interest rate on your loan, and look for any tax benefits you might be missing out on. 

8. Shop Around

This might surprise you, but different banks will lend you different amounts of money. 

I’m not kidding. 

You can give major banks the exact same figures, and get different offers back. 

This is why you should always work with a mortgage broker who knows which bank will give you the best deal. 

And speaking of mortgage brokers, they know exactly how to use your figures to get you the most money.

There are all sorts of rules for how different incomes and expenses are treated, and a good one knows all the tactics in the book to get the best deal. 

And make sure you use a brilliant mortgage broker because I’ve heard too many stories of people who missed out on a loan when they used one broker, only to switch to another and have their loan application sail through. 

In a second I’ll show you how to get access to a brilliant broker who can get you the best rate, the best deal and the highest possible loan amount. 

9. Stay On Top Of The Latest Lending Rules

Look, it might be a bit boring to keep watching the lending policies and requirements. 

But a bit of research can tell you when something becomes more, or less important. 

At the same time, check out the lending serviceability calculators which many lenders have online so you’re aware of their criteria, and can adjust your lifestyle accordingly. 

Want Help Playing The Game?

The best way to look at this is to treat it like a game. 

And like a game, your goal is to do whatever you can to increase your score.

The best way to do this is to find out exactly what your borrowing capacity is. 

And how you can improve it. 

This is why we have a small panel of mortgage brokers we work with who we trust. 

And we can give you access to them by talking to us about your financial and lifestyle goals so we can give you a starting plan to get there. 

And then match you with a broker who can help you best. 

There’s no cost for us to help map out a plan for you, and to put you in touch with the best people to maximise your borrowing capacity.

Enter your details below and we’ll contact you to set up a time to talk with one of our team.