Assuming that your end game is to end up owning or controlling as many investment properties as possible, here are 12 key ways you can boost your borrowing power based on the above discussed DSR (Debt Service Ratios) when applying for your next loan. The points below are based on the principle of either boosting what’s considered your assessable income part of the equation or by reducing your total loan repayment commitments but both of these vary from lender to lender.1.
1. Understand that income types are treated differently by differentlenders, at the extreme of the spectrum, some income types may beexcluded altogether by some lenders and included by others. Income typescan include casual income, commission income, bonus income, propertyrental income, childcare maintenance income, Centerlink income, tax freeincome, motor vehicle allowances, company car income, salary packagingincome, income from dividends, annuity income and the list goes on. Thekey point to consider here is to identify the source of your income and alignyourself with a lender who would ideally include all your income sources intheir serviceability calculations or a lender who would consider the greatestpercentage of your income type towards your serviceability.
2. Consolidate your short term debts into your long term debts, thusreducing your monthly and annual repayments and decreasing your totalannual loan commitments in terms of lowering your actual monthly andannual loan repayments. Transfer all your short-term debts such as storecards, personal loans, car loans and credit cards into your mortgages. Asunsecured personal loans can cost anywhere from 11% to 30% for somecredit cards and most have a short term repayment horizon of 1 to 5 years,transferring these balances to a 30 year mortgage secured by propertyallows you to drastically diminish your monthly loan repayments, not tomention takes advantage of considerably lower interest rates. Here is asimplified example of the substantial difference that can be achieved byrefinancing credit card and car finance short-term debt into a 30 year interestonly mortgage. Pay special attention to the drastic reduction in monthlyrepayments.