Borrowing capacity

A Borrowing capacity is a calculation to determine the maximum amount that can be borrowed. Your borrowing capacity is the amount a lender will lend you to buy a property but it’s not as simple as it sounds. There are many factors involved in determining the amount they come up with, but they all serve to prevent people from borrowing more than they can afford to repay. Managing your credit cards is a major factor in enhancing your borrowing capacity. Lenders will assess your ability to repay a mortgage on the basis that any credit card you own will be fully drawn. If you have a number of credit cards it may be sensible to cancel all but one as lenders view them as a future liability – even if you don’t owe any money on them. Alternatively, if you can’t live with just one, reduce the credit limits on them.