Can I Borrow 8 Times My Salary?
While it is possible for a borrower to successfully borrow 8 times their salary, it may be difficult for some to gain approval. In short, a well-qualified applicant may be able to borrow up to 8 times their salary depending on their borrowing power.
An applicant’s borrowing power depends on a wide variety of elements that a lender or mortgage broker will check when a loan is applied for, including the following examples:
- Sources of income
- Currently owned assets
- Debt and debt repayment history
- Family size
- Financial responsibilities and capabilities
- Credit score
- Financial history
- Loan deposit amount
- Loan terms, interest rates, and amount being borrowed
A lending specialist relies on borrowing power to determine the applicant’s ability to repay the loan in question. Lending specialists also look at an applicant’s credit score and financial history to determine their risk factors. If an applicant of a home loan is determined to be a high-risk borrower, they will typically be required to pay for Lenders Mortgage Insurance (LMI).
A potential applicant can increase their borrowing power through a variety of methods, including the following examples:
- Boosting their credit scores
- Improving their financial history
- Consistently making debt repayments
- Lowering any high credit card limits
- Saving for a larger loan deposit
- Closing any unused or unnecessary credit cards
If you are interested in learning more about your borrowing power or are ready to apply for a loan, reach out to the professional lending specialists at Mortgage House! We are prepared to answer any questions you may have about borrowing and provide tailored assistance with loan applications.