Marissa Schulze

And the reason for that is because they are short-term debts and they're on such high interest rates, the repayments are very, very high when calculated by the bank.

So it does put a big spanner in the works.

So if you're trying to increase your borrowing capacity and the servicing is a bit tight, there's a few things you can do.

You can, like I said, reduce your credit card limits.

You can try and reduce any personal loans or car loans or any expensive forms of debt.

One option there is to try and consolidate those into a home loan, which would significantly reduce the interest rate and the repayment and increase your borrowing capacity.

The other thing that you can do is also review your living expenses.

You might remember, Craig, that I said that the banks look at what your income and expenses are, and one of your biggest expenses that they look at is they actually review your living expenses.

And many banks actually look at your bank statements for the past six months to actually determine what your actual living expenses are.

So if you can reduce your living expenses and spend less on discretionary spending before applying for a loan, then that's going to significantly increase your borrowing capacity and going to allow you to borrow more for the purpose of buying property or refinancing property or getting equity out of property.

So the second thing that the banks look at is security.

So that is what equity do you have available in existing property that you own or what deposit do you have?

So obviously the more equity you've got and the higher the deposit you've got, the lower risk the bank perceives you are and the more they might be willing to lend you.

So one way to increase your borrowing capacity from a security perspective is to look at your existing properties and see if there's a way to

add value to those existing properties without spending too much money.

For example, could you do a quick cosmetic renovation?

Could you add a room or a bathroom or something of that nature to an existing property?

If you don't own any property currently, then one way obviously to increase your position from this perspective is to enhance your savings and try and save more money.

Yes, it is possible, particularly if it's a house that they're going to live in.

If they are wanting to buy a house with no deposit, there are a few options available to them.