If rising rates and tight lending rules have capped your borrowing power, you are not alone. This guide breaks down the exact steps you can take to increase your borrowing capacity in 2026, from removing hidden debt traps to choosing lenders that support long term investing.
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If you’re feeling stuck because you’ve hit your borrowing capacity limit, you’re not alone. With lending rules tightening and cost-of-living pressure increasing, many investors feel capped before they even begin.
The good news is that there are practical ways to increase your borrowing power in 2026, so you can keep investing and take advantage of opportunities ahead.
Unless you’re part of the small percentage of people who can buy property in cash, you rely on lenders to grow your portfolio. Your borrowing power determines whether you can buy, what you can buy, and how fast you can scale.
If you want to invest well, you need debt. If you want to invest strategically, you need to maximise how much you can borrow.
Below are the exact methods you can use to improve your borrowing capacity even if you’re on an average income.
Interest rate cuts directly improve your borrowing capacity. Even a small reduction can increase how much you can borrow by ten to fifteen percent, sometimes more.
What many borrowers do not realise is that banks do not wait for the Reserve Bank to cut rates. Individual lenders adjust their products to stay competitive. Some lenders quietly offer lower rates even when the cash rate is unchanged.
If you refinance into a lender with a lower rate and more favourable policies, your borrowing capacity increases even if your income stays exactly the same. This is why working with the right mortgage broker is essential. Your broker should be searching across lenders, comparing policies, and repositioning you for better borrowing power.
HECS is one of the biggest silent killers of borrowing capacity.
Even though it does not appear as a traditional debt, lenders see it as an ongoing repayment taken out of your income. If your payslip shows HECS deductions, the bank reduces your usable income. Less usable income means lower borrowing power.
If your HECS balance is relatively small and you have savings available, paying it out can instantly increase your borrowing capacity. It is one of the simplest fixes, yet many borrowers overlook it.
This is one of the biggest borrowing capacity killers.
Most people proudly say, “I have a credit card, but I pay it off every month.”
Banks don’t care.
The only thing they assess is your credit limit, not your current balance.
If your limit is $15,000 or $20,000, the bank treats it as if you could spend it tonight. That reduces your borrowing capacity dramatically because lenders calculate your repayments as if the card were maxed out.
If you want to increase your borrowing capacity fast, reducing or cancelling unused credit cards is one of the easiest wins.
This is one of the biggest mistakes investors make.
A slightly lower interest rate does not always mean a better outcome. Some lenders have strict policies that dramatically reduce how much you can borrow. Others have flexible rules that allow you to borrow more, even if their rate is a little higher.
Think of it like this. You are not committing to an interest rate forever. Rates change. You can refinance. What you cannot do is grow a portfolio if your lender restricts your borrowing power.
Focus on lenders that support long-term investing, understand investment income, and offer favourable servicing rules. This can easily add six figures to your borrowing capacity.
A longer loan term reduces your monthly repayments. Lower repayments improve servicing, which improves borrowing capacity.
Extending your term back to thirty years during a refinance, or choosing lenders that allow longer terms, can make you eligible for your next purchase sooner. Some lenders even offer forty-year terms.
Many borrowers hesitate because a longer term means more interest paid over time. In reality, most successful investors never hold a loan for thirty or forty years. Rising property values, refinances, and equity growth mean your loan position will change long before then.
What matters is unlocking the borrowing power you need to buy the right assets today.
Loan structures have a major impact on how much you can borrow. This includes how lenders calculate repayments, how they treat rental income, and how they assess your overall risk profile.
Some borrowers also explore purchasing through trust structures primarily for asset protection. Structuring needs to be done carefully and with professional guidance because the wrong structure can restrict lending.
Your broker should review your entire financial setup and match you with lenders and structures that will maximise borrowing power while supporting long-term investment goals.
Increasing your borrowing capacity is not about earning more. It is about structuring smarter, choosing the right lender, and removing the factors that quietly suppress your buying power.
If you want to invest confidently in 2026, now is the time to position yourself correctly.
At Search Property, we work closely with mortgage experts to help you invest with clarity, speed, and a proven long-term strategy.
Book your free discovery call today and get the support you need to move forward with confidence.
Disclaimer: Search Property Pty Ltd (SP) does not provide financial or investment advice and does not hold a financial services license as defined in the Corporations Act 2001 (Cth). Any advice given by SP is general in nature and does not take into account your personal circumstances or objectives, financial situation or needs.
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