Expanding your property portfolio is an exciting goal, but securing finance can sometimes be a challenge. One of the key factors, lenders assess is your serviceability – your ability to comfortably manage loan repayments based on your income, expenses, and existing debts.  

If you’re looking to strengthen your serviceability and move forward with your next investment property, here are some proven strategies to help you get into a stronger financial position.  

  1. Increase Your Income 

A higher income can significantly boost your borrowing power. Here’s how you can increase your earnings:  

  • Negotiate a Pay Rise – If you’ve been performing well in your current role, now might be the right time to discuss a salary increase with your employer. Not often do you get a pay rise without asking 🙂 
  • Take on a Second Job – A casual or part-time job can supplement your main income and improve your serviceability.  
  • Start a Side Business – If you have a valuable skill, hobby, or expertise, consider turning it into a side hustle. Just keep in mind that lenders typically require two years of income history from a business before considering it in loan assessments.  
  1. Reduce Your Debt & Expenses

Lenders assess your debt-to-income ratio, so reducing debt and unnecessary expenses can help strengthen your position.  

  • Pay Down Existing Debt – Clear credit card balances, personal loans, or car loans to improve your financial standing.  
  • Consolidate Debt to Lower Repayments – If you have multiple debts, consolidating them into a lower-interest loan can reduce your total monthly repayments. Often, we will consolidate debt into a home loan when doing a refinance.  
  • Reduce Credit Card Limits – Even if your card balance is low, lenders assess the total credit limit as a liability. Lowering or cancelling unused credit cards can improve your borrowing capacity.  
  1. Optimise Your Existing Loans 

If you already have loans, structuring them correctly can improve your serviceability.  

  • Reassess Your Mortgage Structure – Refinancing your home loan or negotiating a lower interest rate can reduce your repayments and free up cash flow. Let us know if you need a hand. 
  • Consider Interest-Only Loans for Investments – This can reduce your monthly commitments and improve your borrowing power, but it’s important to assess if this is the right strategy for you.  
  1. Improve Your Creditworthiness 

A strong credit history increases your chances of securing a loan.  

  • Check and Improve Your Credit Score – Review your credit report for any errors or outstanding debts and address them before applying for finance.  
  • Maintain Good Financial Habits – Avoid late payments and excessive credit applications, as these can impact your score.  
  1. Increase Rental Income on Existing Properties 

If you already own investment properties, consider ways to boost rental income:  

  • Renegotiate Rents – If market conditions allow, increasing rent can improve your serviceability.  
  • Offer Fully Furnished Rentals – This can command higher rental returns, particularly in high-demand areas.  
  • Switch to Short-Term Leasing – Platforms like Airbnb may offer better cash flow compared to long-term leasing.  
  1. Shop Around for a High Property Valuation 

Different lenders assess property values differently. If one lender provides a lower-than-expected valuation, don’t be afraid to get a second opinion. A higher valuation can increase your equity and borrowing power, giving you a stronger financial position. This can often be the difference in you moving forward with your next purchase or NOT. 

  1. Reduce Discretionary Spending 

Lenders review your recent bank statements to assess your spending habits. Reducing non-essential expenses – such as excessive dining out, subscriptions, or impulse purchases – can demonstrate financial discipline and improve your loan application.  

  1. Pay Off HELP/HECS Debt (If Applicable) 

If you have a student loan, consider paying it off sooner. Since HELP/HECS debt is deducted directly from your income, eliminating it can increase your take-home pay, which boosts your serviceability.  

  1. Strengthen Your Employment Position 

Lenders favor stable employment. If you’re working casually or on a contract, transitioning to a full-time or permanent role can improve your loan eligibility. A longer employment history with the same employer also helps.  

  1. Get Expert Guidance 

Navigating loan applications can be complex, and not all lenders assess serviceability the same way. Working with a finance expert or mortgage broker can help you:  

  • Identify lenders with more flexible criteria.  
  • Structure your loans in a way that maximises borrowing power.  
  • Develop a tailored financial strategy to move forward with your investment plans.  

Final Thoughts  

Improving your serviceability is all about boosting your income, reducing your liabilities, and structuring your finances effectively. By taking proactive steps, you can put yourself in a stronger position to secure finance and continue growing your property portfolio.  

If you’re ready to discuss your next investment move, let’s chat! I’d love to help you develop a strategy to get you into your next property sooner.  

Have questions or need personalised advice? Reach out today! 

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