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Six things to do today to boost your borrowing power by $130k

March 22, 2023 by viridity

Today I'm doing nothing but relaxing

RateCity research director Sally Tindall says a six step financial makeover is crucial to secure higher levels of borrowing power in this market.


The average person could add $130,000 to their borrowing power by taking six clear steps from the comfort of their couch – and a warning, one of them involves getting stuck in with scissors.

Analysis by RateCity found a single person earning the average wage of about $92,030 could potentially boost their borrowing power by 36 per cent with a good clean-up.

“The scenario is based on someone earning the average wage before the rate hikes who hasn’t had a pay rise since,” according to RateCity research director Sally Tindall. “The person has a $10,000 credit card limit and is planning on applying for a big four bank basic variable loan with a 20 per cent deposit. They spend $2,400 in essentials each month (not including housing costs).”

SMARTdaily cover photo: RateCity's Sally Tindall

RateCity research director Sally Tindall. Picture: Tim Hunter.


She said if the person could secure a 4.25 per cent pay rise – which was RBA’s forecasted annual wages growth for the end of 2023, close their $10,000 credit card, switch to one of the lowest variable rates for someone with a 20 per cent deposit, and cut down their expenses by 25 per cent, they could potentially borrow an estimated $137,900 more from the bank.

“It’s astounding what cutting up a credit card, and cutting back on unnecessary spending can do to your chances of getting approved on a home loan,” she said.

The first step was to increase your income, she said. “If you’re a hardworking employee, ask your boss for a pay rise. It’s an awkward 10-minute conversation but it could boost your borrowing capacity by tens of thousands of dollars.”

She said banks often wanted three months’ of pay slips so be sure to ask well ahead of time.

Step two was to shop around for a low rate. “Banks stress test your finances on the rate you are applying for, plus an additional 3 percentage points. This means, the lower your variable rate, the more you are likely to be able to borrow.”

Portrait of desperate young woman feeling stressed checking online banking accounting home finances not able to pay off debts, mortgage, rent and expenses. In paying bills and financial problems.

Make hard decisions and turbo charge your savings strategy to boost your deposit level.


Step three was to spend less and save more. “The bigger your deposit is, the less you’ll need to borrow, so turbo charge your savings strategy today. A larger deposit will also help you minimise or even remove the need to pay lenders mortgage insurance.”

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