How To Increase Home Loan Amounts
There are situations that call upon borrowing more money from your current home loan provider. But just because your house has increased in value and you can borrow more against it doesn’t always mean that you should. Only consider borrowing more if:
- You actually intend to use the money for good (home renovation that will increase its value further).
- Your current home loan provider is giving you a better rate than the prevailing market rates.
- You really do not want to change lenders.
This further advance will typically act as a separate deal from the one you already hold and as such is often offered at a different rate. You can spread the payments out over a long period of time and the fact that you already have a good history with your current lender means that the application, approval and disbursement process will be fairly straightforward.
How to increase that loan amount
Before you even consider applying for a further cash advance, there are some criteria that you must meet; just to ensure that you have actually increased the loan amount that you can get. Otherwise, there would be no point to this entire exercise and your lender might be forced to either turn you down or give you stringent and unfavourable terms. Here are tips on how to increase your loan amount:
- Ensure that you maintain a good credit rating at all times.
- You have made additional renovations to the house that have tremendously increased its value.
- This increase in value has greatly exceeded the mortgage amount you borrowed initially (you have home equity).
- You have done the calculations and have realised that you can easily afford the additional monthly charges.
- You actually have something worthwhile to do with the borrowed amount (sometimes it helps if the lender can see a business plan as to how you are going to spend the money).
- Talk to your lender and see how you can go about getting the further advance.
- Look around the market to see if there aren’t any other better offers that could mean more money for you.
If all this fails and you still do not have the kind of money you need, there is still one more trick you can try out to get the money. You could always approach your bank and see what kind of deal can be made if you cosigned with a guarantor. Using a guarantor could give you better firing power when it comes to loan amount qualification. But this should only ever be used as a last resort.
Otherwise, the things you do in the years right after you take up your first loan will determine just how much equity you have on the house and how much more you can borrow.