_{0.55 – Cate kicks off the third episode in the borrowing capacity series}

_{4.46 – Mike steps through some credit card scenarios (and disasters) for Dave to solve}

_{9.55 – What happens if a borrower pays down a car lease or personal loan portion earlier… does it help borrowing capacity? The answer may surprise.}

_{20.50 – One of the best tips any borrower could hear when it comes to buying a car}

_{23.12 – Next week’s sneak peek}

_{30.03 – Cate talks through the differences between houses, cars and personal loans when it comes to lenders and how they consider debt consolidation}

_{41.17 – Gold Nuggets!}

Welcome to Episode 3 of our special Property Trio trilogy, where we wrap up our deep dive into one of the most critical aspects of property investing in today’s environment: borrowing capacity. For our listeners who have tuned in to the first two episodes — where we covered lending fundamentals and the importance of the right loan structures — this third instalment will deliver intel which is all about maximising borrowing power with practical strategies.

We explore the details of how lenders assess borrowing power and what levers borrowers can pull to optimise borrowing outcomes. The Trio brings both the insider knowledge from the lending world and the hands-on experience of working with hundreds of property investors and buyers.

The Trio tackle the following segments:

✅ Income Optimisation
Not all income is treated equally by lenders. Whether a borrower is a PAYG employee, self-employed, or juggling multiple income streams, they break down how to present earnings in the best possible light to maximize borrowing ability. This includes guidance for self-employed income earners, those with casual employment, and investors with rental income.

✅ Trimming the Fat: Expense Auditing
Discretionary spending can significantly undermine your serviceability. The Trio discusses how to identify and cut back non-essential outgoings. From subscriptions, after-payments, to even gym memberships…. these all add up in the eyes of lenders.

✅ Tidy Up Your Credit File
Unused credit cards and Buy Now Pay Later services can inhibit borrowing capacity. The Trio explains the importance of credit file hygiene and the steps to clean up liabilities for a stronger application and optimised borrowing capacity.

✅ Debt Consolidation – Yes or No?
When does it make sense to consolidate personal debts before applying for a home loan? The Trio examine the pros, cons, and myths around bundling debts for better serviceability.

✅ Lender Policy Matching
Not all banks view = finances the same way. A key theme in this episode is choosing the right lender based on each borrower’s unique profile. Cate, Mike, and Dave explain why a savvy mortgage broker or planner can be the difference between a finance rejection and an approval.

✅ Long-Term Readiness
The Trio also discusses the importance of staying ‘loan-ready’ — with tips on financial preparation that stretch beyond a single transaction. When it comes to property, being ready to strike at the right time is critical.

🧠 Should Borrowers Stretch Their Borrowing to the Max?
Finally, we tackle the controversial question: Is it ever wise to borrow up to full capacity? The Trio shares their thoughts on risk appetite, growth planning, and the fine line between ambition and overreach.

This episode is packed with real-world strategies that buyers can start applying today. Whether buying a first home, upgrading, or growing a portfolio, these tips are tailored to give borrowers the upper hand.

…. and our gold nuggets!

Mike Mortlock’s gold nugget: Going to your bank manager is a thing of the past. These days, it’s quite complicated. Mike chats about some of the serious challenges that debt-consolidation borrowers face.

David Johnston’s gold nugget: “Without the full picture, you can unintentionally weaken your financial position and go down a path that is not best for you. It really pays to make sure you discuss any changes with your strategic mortgage broker and ensure you understand hte full picture before you make any big decisions.”

Cate Bakos’s gold nugget: Debt consolidation can either be liberating, or it can be a curse. Mortgage strategy is discipline is essential for success.

Related episodes:

Ep. 34          No mortgage strategy – No.4 of the top 7 Critical Mistakes

Ep. 115       How much can I borrow? How borrowing capacity can be impacted, massaged and manipulated (without breaking the rules of course!)

Ep. 116       How to increase your borrowing power – Learn how investors, first home buyers and upgraders increase capacity

Ep. 191       Risk management and the things that can go wrong when mortgage strategy is ineffective

Ep.234       Unveiling the Secrets of Elite Strategic Mortgage Brokers – Navigating Advice, Skills, Results, Relationships & Regulations!

Upcoming episode: #310: Market Update – April Monthly Market Update

Resources:

Here are the charts that Dave prepared for this episode, (all in chronological order)

Single earning $150,000

• Owner occ purchase
• Major lender
• No dependents
• Living expenses – $3,500

Credit Cards	20K limit	Reduce to $5K	Close Facility
Borrowing capacity	$615,000	$685,000	$708,000
Loan size increase		$70,000	$93,000
Property Value	$768,750	$856,250	$885,000
Property Value increase		$87,500	$116,250
Savings to complete	$192,188	$214,063	$221,250
Savings to complete increase		$21,875	$29,063

Couple earning $300,000 (50/50)

• Owner occ purchase
• Major lender
• No dependents
• Living expenses – $6,500

Credit Cards	20K limit	Reduce to $5K	Close Facility
Borrowing capacity	$1,390,000	$1,460,000	$1,483,000
Loan size increase		$70,000	$93,000
Property Value	$1,737,500	$1,825,000	$1,853,750
Property Value increase		$87,500	$116,250
Savings to complete	$434,375	$456,250	$463,438
Savings to complete increase		$21,875	$29,063

Single earning $150,000

• Investment purchase, IO 5 years, 6.24%
• Major lender
• No dependents
• Living expenses – $3,500
• Existing owner occ loan – Balance $426,272, P&I, 27 years remaining term, 5.90%, repayment $2,669
  • Original loan – $450,000
• Car Loan – $30,292.63 – 3 years remaining – monthly repayment $943.12
  • Original loan – $47,000 over 5 years at 7.56%

Strategy	Keep car loan as is	Pay out and close car loan
Borrowing capacity	$220,000	$390,000
Loan size increase		$170,000
Property Value	$275,000	$487,500
Property Value increase		$212,500
Savings to complete	$68,750	$121,875
Savings to complete increase		$53,125

Couple earning Combined $300K (50/50 each)

• Investment purchase, IO 5 years, 6.24%
• Major lender
• No dependents
• Living expenses – $6,500
• Existing owner occ loan – Balance $756,530, P&I, 27 years remaining term, 5.90%, repayment $4,745.09
  • Original loan – $800,000
• Car Loan – $30,292.63 – 3 years remaining – monthly repayment $943.12
  • Original loan – $47,000 over 5 years at 7.56%

Strategy	Keep car loan as is	Pay out and close car loan
Borrowing capacity	$850,000	$1,040,000
Loan size increase		$190,000
Property Value	$1,062,500	$1,300,000
Property Value increase		$237,500
Savings to complete	$265,625	$325,000
Savings to complete increase		$59,375

Single earning $150,000

• Investment purchase, IO 5 years, 6.24%
• Major lender
• No dependents
• Living expenses – $3,500
• Existing owner occ loan – Balance $426,272, P&I, 27 years remaining term, 5.90%, repayment $2,669
  • Original loan – $450,000
• Car Loan – $30,292.63 – 3 years remaining – monthly repayment $943.12
  • Original loan – $47,000 over 5 years at 7.56%

Strategy	Keep car loan as is	Pay out and close car loan	Consolidate Car Loan to Owner Occ
Borrowing capacity	$220,000	$390,000	$350,000
Loan size increase		$170,000	$130,000
Property Value	$275,000	$487,500	$437,500
Property Value increase		$212,500	$162,500
Savings to complete	$68,750	$121,875	$109,375
Savings to complete increase		$53,125	$40,625

Couple earning Combined $300K (50/50 each)

• Investment purchase, IO 5 years, 6.24%
• Major lender
• No dependents
• Living expenses – $6,500
• Existing owner occ loan – Balance $756,530, P&I, 27 years remaining term, 5.90%, repayment $4,745.09
  • Original loan – $800,000
• Car Loan – $30,292.63 – 3 years remaining – monthly repayment $943.12
  • Original loan – $47,000 over 5 years at 7.56%

Strategy	Keep car loan as is	Pay out and close car loan	Consolidate Car Loan to Owner Occ
Borrowing capacity	$850,000	$1,040,000	$1,000,000
Loan size increase		$190,000	$150,000
Property Value	$1,062,500	$1,300,000	$1,250,000
Property Value increase		$237,500	$187,500
Savings to complete	$265,625	$325,000	$312,500
Savings to complete increase		$59,375	$46,875