How to Borrow More in 2027 (Broker Secrets)

This couple wanted to buy an investment property, but the bank said no. After a few tweaks with a mortgage adviser, they were approved to borrow $580,000 more. In this episode, Ed and Andrew share three real examples of Kiwis who unlocked more borrowing capacity... and the everyday things that quietly drag your capacity down. You'll learn: Why can the bank lend you $80k less in six monthsHow clearing a $10k student loan added $225k of borrowing powerThe unused credit card could be costing you a depositIf the bank says no, it's often not a no forever. Sometimes it's just a number waiting to be moved. Let us know your thoughts by leaving us a voice message on the Property Academy Hotline⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://www.speakpipe.com/PropertyAcademy For more from Opes Partners: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Sign up for the weekly Private Property newsletter⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://www.opespartners.co.nz/newsletter-sign-up⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Instagram⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://www.instagram.com/opes_partners/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠TikTok⁠⁠⁠⁠⁠ https://www.tiktok.com/@opespartners

• 0:00Speaker 00

  Hello, welcome all to the Property Can It Be Podcast. I'm your host, Steve McKnight.

• 0:03Speaker 01

  And I'm Andrew Nicoll.

• 0:04Speaker 00

  And this is a show that helps Kiwis go from zero to five investment properties. So you could be financially free and stick around for the next 15 minutes because you're going to learn how to increase your borrowing capacity in 2026. The Kiwi who got the bank to lend them $580,000 more by doing this. And the one mistake that cost an investor $60,000 of borrowing power. Now, there was this Auckland woman and the bank was willing to lend her about $830,000. But six months later, the same bank would only lend her about 750K. So that's $80,000 effectively gone in six months. Now, here's the thing that's interesting. Her income hadn't actually changed, her savings hadn't changed.

• 0:49Speaker 00

  She actually hadn't done a single thing wrong. But what had changed was that the bank had changed their rules and it effectively cost her $80,000 in lending. And I think the part that people don't talk about enough is that what the bank lends you can change. Effectively, it's a number produced by a machine and the machine's settings can move. But you can also adapt the numbers that you put into the machine. In other words, adapt your mortgage application to present it in a light that the bank's going to look favourably on. So before we get into the case studies of ways that you can potentially borrow more, how does the bank actually decide whether they're going to give you a mortgage or not?

• 1:34Speaker 01

  So there are three hurdles that you've got to be able to clear to be able to get a mortgage in the first place. So number one, you've got to meet the LVR or loan to value ratio, the criteria there. And that's basically how much deposit have you got? What sort of equity or cash are you putting into the purchase? Hurdle number two is your debt to income ratio. So these are the new rules where the banks have criteria set by the Reserve Bank where it says you can't borrow any more than six times your income for an owner occupier. Or if you're an investor, seven times your income. And hurdle number three, and that's the big one probably for today, is uncommitted monthly income. So can you afford to make the new loan repayments, not just in today's interest rate and the

• 2:15Speaker 01

  way you want to structure it today, but on the bank, on the bank test conditions? That might be a higher interest rate, might be principal and interest, even if it's interest only, and it might be after discounting your rent, if you're collecting rent as well.

• 2:31Speaker 00

  And the thing you've got to remember is you can pull different levers to try and get through each gate or jump over each hurdle to get your loan across the line. And I'll give you an example of what that can look like. So this is one of the ones that a lot of investors have never considered. So there was an investor who wanted to go ahead and purchase a property. They earned really good income. It was like $120,000, right? Now, there's a little bit of a quirk here because this person had a student loan, which is $10,000. And so it's not a particularly large loan, but it can take up a lot of your income. Because what you've got to remember is that above about $24,000, you're going to pay 12% of your income. It's actually a lot of money, eh?

• 3:16Speaker 01

  Yeah, and I think this is what people, this catches people out because obviously your servicing, your ability to afford a mortgage, it depends on what you've got going out and your student loan repayments, they can be quite big because unlike a normal loan, like a normal personal loan on, say, a car, the repayment size depends on the loan size. But with a student loan, your payment size depends on your income size.

• 3:41Speaker 00

  And so the thing is, if he could clear that $10,000 student loan, and let's say he had the deposit in order to be able to clear that, right? The bank could then say, oh, all of a sudden, you've got $959 extra per month to put towards that mortgage. And if he's buying an investment property, and we put all of us, and he's buying a property with a yield of, say, four and a half percent, the average in New Zealand, we look at the bank's assumptions around how they're going to stress test a mortgage. Well, that means that he might be able to borrow an extra $225,000 for that investment property. And that's because there are a few things going on.

• 4:23Speaker 00

  Not only does he have more income to be able to service a bigger loan, remember, if you can buy a more expensive investment property, maybe you can get more rent for that as well. Well, that's going to count. That's even more income, which means that you can borrow even more money. Now, when you add that all up, it can be, you know, just over 200 grand. Like, that's a lot of money.

• 4:44Speaker 01

  That's pretty significant. If you think about, you know, if someone's wanting to grow their investment portfolio over, you know, a few years, that could help speed it up quite significantly.

• 4:52Speaker 00

  And so what he'd want to do in that case, or what he might consider with his mortgage advisor in that case, is finding a way to clear that $10,000 student loan, if he's got the money to be able to do it. The alternative thing he might think about, if he, if he doesn't have the money to do it right now, is just being able to wait until that's gone. Because maybe the bank says no today, but once that student loan's paid off and gone, might be able to get a yes. But that's not the only thing you can do, right?

• 5:19Speaker 01

  Yeah, I'll give you another example. Let's say now we take a couple in their 30s and they've got two goals. They want to pay off their personal mortgage, but they also want to buy an investment property. And this is often the case when you kind of meet people who are, who are trying to get ahead for their future. But again, they also want to get out of debt. Now, because often if people want to pay off their mortgage more aggressively, pay it off faster, what they'll do is they will structure the loan term as a shorter period. So you'll say to the bank, right, let's pay this off over 10 years, which is all well and good, apart from now you're absolutely committed to paying that over 10 years, even though these guys are in their 30s and so they'd still be in their 40s by the time it paid off.

• 6:02Speaker 00

  And this is the thing that's interesting. Because the bank's going to assess your mortgage at a higher interest rate, many at the moment are around 7%. Your tested repayment, when the bank is running the calculations about, are we going to lend these guys more money? Your tested repayment is 5,800 bucks a month, right?

• 6:22Speaker 01

  Yeah, if you just change it to 30 years from it up. So if you change the term to 30 years, which is the maximum term that most banks will, will allow you to pay a loan over, now you're kind of, kind of 3,300.

• 6:34Speaker 00

  So is that an extra two and a half grand a month that the bank would say, oh, you've got extra income now?

• 6:40Speaker 01

  Now, these guys still want to pay their mortgage off as quickly as possible. But what we're going to do is they might extend that term to 30 years. So the maximum that the bank will allow, that frees up their, their committed repayment. So drops it down by two and a half grand a month. That two and a half grand then allows them to extend the amount of investment borrowing that they can borrow. Like, this is where it gets really significant. Now, it's almost $600,000, 582,000 extra borrowing to buy a rental property. So it could have been that these people, because they've been diligent and paid off their mortgage faster or trying to pay off their mortgage faster, they might not have even been able to invest in property based on the current structure.

• 7:23Speaker 01

  But now by extending the term, that frees up the cash flow on the bank side. Now, you might be thinking, well, hang on a minute, they're still going to pay their home off over 30 years? No, that's not the case. So the way they've structured their loan is they've taken a portion of their mortgage, let's say 10%, they've made that a revolving credit facility, and they're putting that extra money that was going on to the, the main mortgage and to the revolving credit. We call that the mortgage buster. And so then at the end of the year or the two years it takes them to pay that revolving credit off, they whack it off the mortgage.

• 7:56Speaker 00

  And the important thing here is it's all about what is the payment you have committed to? So if you do what's called document your loan at 10 years, so on the contract it says, we're paying this off over 10 years, then the committed repayment will be very high. If you document your loan over 30 years and say, that's what we've committed to, then the committed payment will be lower. But there is nothing stopping you to continue to pay down that mortgage at a very aggressive rate because that money is now uncommitted. That's why it's called uncommitted monthly income. That's the hurdle we're specifically talking about here. And changing how your loan is structured can give you more uncommitted monthly income,

• 8:40Speaker 00

  even if you're still going to use it for the purposes of paying down your mortgage really, really quickly. And the thing, the reason the bank does it this way is because they're thinking about, okay, what are your commitments? What happens if interest rates go up? What happens if you only have a tenant 75% of the time in these test conditions? What have you committed to? But I think that what people don't cotton on to sometimes is, oh, there are ways to adapt what you have committed to if your goal is to go ahead and get more lending to, to invest in property.

• 9:12Speaker 01

  I think the other thing is people really struggle to get over that barrier in their mind that if they've got a longer documented term, that they're going to pay that mortgage off over a longer period of time. But even if you're not trying to get out more lending, I always said to clients when I was a mortgage broker, have the maximum term because if you go for a shorter term and then you lose your job, well, the bank's probably unlikely to extend that term at that stage. Just, just take whatever you can get. That's not going to stop you paying down your mortgage more aggressively.

• 9:42Speaker 00

  Now, that plan though, with a revolving credit and still maintaining good repayments against your mortgage, that only works if you actually stick to it, right? If you decide to extend the loan term, oh, we'll pay it off over 30 years, but actually we're going to do it over 10 years. And then you don't make those Those extra repayments, well, then you've ruined your plan, right? You actually haven't followed through on it. So it is important to recognise if you're the sort of person that if you extend your loan term out and you're like, oh, I've got, I've got free cash flow now that isn't committed to my mortgage payment, or maybe I'll just skip it this month. Well, well, that might be a situation where you wouldn't set yourself up this way because you know that you can't actually stick to the plan.

• 10:25Speaker 01

  You can still pay a loan off over a shorter period of time on your main loan. So depending on the bank, you can, let's say you fix for a year at a time, you can set your repayments at a higher rate so you don't have to use a revolving credit if you can't be trusted.

• 10:41Speaker 00

  Okay, interesting. Now, do you have one more example for us?

• 10:44Speaker 01

  Yeah, I do. So another client, they've got a credit card with a 10K limit, but they use it each month and then they pay it off in full. Or actually another example of people just having one for emergencies. So I've got other clients who, they've got a family over in the UK. If they even need to go to the UK, they want to be able to just, you know, buy tickets without having to worry about the cash flow of it. Now, that all sounds good, apart from the bank looks at this as if you've maxed out your credit card at all times. Now, the reason for that is you could. Now, you might have made your repayment on time every time for your entire life, but you treated the same as if someone has maxed out their card and is making the minimum payment.

• 11:27Speaker 01

  So that 10K credit card limit that's unused all gets paid back every month. Well, that takes away about $400 worth of month worth of commitments towards making that minimum payment. Now, you might think, well, that's not really a lot in terms of, you know, money going out, a hundred bucks a week kind of thing. Well, actually it affects your borrowing for a rental property by about $94,000 in today's kind of test conditions. So you're not buying a property, you don't buy an investment property for $94,000 or you're unlikely to, but this could be the difference between buying the property that you want to get as a rental or not be able to afford that and having to buy something a little less quality.

• 12:06Speaker 00

  And look, sometimes when I've given like talks about property investments, somebody, especially somebody young will come up to and say, I've got a $5,000 credit card. Does that mean that I should cancel it? And I often say to them, well, not necessarily. It's, you would do this if you've got one, you don't need that credit card in the future. And if it is uncommitted monthly income, it's the servicing side of the calculation, the income and expenses side of the calculation that's holding you back. If you're a first home buyer and it's actually deposit holding you back, you might cancel your credit card and actually it's made absolutely no difference to your situation. So that's where it can be useful, talking to a mortgage advisor to say, hey, look, I, I, I've heard about all of these different options, what's actually going to work for me?

• 12:51Speaker 00

  And sometimes even reducing the limit can work because you might have a credit card and we're going to say a really big one. I know one of my teachers back in the day, because they told me what their credit card limit was. I don't know why my high school teachers did that, but I was very close with them.

• 13:04Speaker 01

  You and I, only like two days ago, you called me up at the weekend, said, Sunday afternoon, I was, I was cooking and Ed was just telling me some weird things around his teacher dynamics and now you've got another story for me.

• 13:17Speaker 00

  Well, that, that one that I told you is not, that's not, that's not covered on YouTube. We're going to be put into the adults only section then. But anyway, this lovely teacher had a $30,000 credit card limit or so. And so even if they just reduced that down, that could potentially lead to being able to borrow more. Again, with all of the things I said before, not guaranteed to let them borrow more, but if this is what is actually holding them back. So if you've got a $20,000 card that you're keeping there just in case and it's potentially stopping you from borrowing like $180,000, maybe you do just to reduce it a little bit or have a buffer aside that you say, okay, that's my emergency fund over there, right?

• 13:59Speaker 01

  But also like you kind of think, okay, again, this is where you do need to talk to a mortgage broker because imagine if you had $10,000 owing on your credit card from, from a trip from last year and you're paying off the minimum, which isn't ideal, but let's say you're doing that. If you also had a deposit to buy your first home and you take your money out to pay off your credit card to balance out your servicing, but now you don't have a big enough deposit, well, now you've, now you've ruined your chances.

• 14:28Speaker 00

  And I should also say that it does depend on the bank, right? So when we're choosing banks at Opus Mortgages, we often look for four things. The first thing is affordability, which is do you actually meet the bank's affordability criteria? Because some banks actually don't apply that credit card rule.

• 14:44Speaker 01

  Oh, they charge it now.

• 14:45Speaker 00

  Yep, some banks will say, well, if you've already paid off the entire credit card and you routinely pay it off, actually we're no longer going to consider that. So some banks do and some banks don't. So that's where you've got to say, well, do you meet each bank's affordability? So even if somebody's got a really cheap interest rate across the road, if you don't qualify for a mortgage under their lending criteria, it doesn't matter, you can't get that lower interest rate across the road because the bank's not willing to give you the loan. The second thing is price. So like that could be interest rates, it could also be cash contributions. You know, recently there were some banks who were doing, I think, 1.2% cash backs. So take out a million dollar loan, you're getting $12,000 worth of cash, whereas some

• 15:28Speaker 00

  other banks might be doing, say 0.9%, which would be $9,000 worth of cash. So we've got to think about affordability, we've got to think about pricing. The other thing that I think people don't think enough about is policy as well. So I'll give you a good example about that because it's not always who's going to give you the most money. It can also be, well, which bank isn't going to charge you the most? So let's say you're buying a new build property. Some banks don't actually require you to get a registered valuation. Now, that might cost you 700 to say, uh, 700 to a thousand dollars. Well, if that bank is actually going to save you a bit of money, well, maybe that's valuable to you, not just the interest rate and what the cash contribution is. And the last thing that I just, just say that we look for, and you'd see that if you

• 16:13Speaker 00

  spell it out, it's, it spells app, right? For, for mortgage application, it's a nice little, what do you call it, a debt critum? Don't roll your eyes at me.

• 16:20Speaker 01

  You love, you love.

• 16:21Speaker 00

  I love it, I love it, a debt critum, I love alliteration, but the last one is product. So do they actually offer what you want? So I'll give you an example, like ANZ TSB offer 10 year interest only periods. Most of the other banks will only do five years. If you really want that product, then you might need to go to one of those banks who offers that. Some people really love offsets and they hate revolving credits. I think there are three out of the six major banks that actually do offsets. And so it's, it's not just like the, the issue that I come up with is people think that, oh, we've got a blue bank and actually that's ANZ and then we've got another blue bank that's BNZ and then we've got a green bank and we've got a red bank and a yellow and apart from the colour, it's all the bloody same. It's not the same.

• 17:04Speaker 01

  Well, people just kind of think it's about the best rate. So often I'll have people go, will your brokers give me the best rate? Oh, I certainly hope that there's more to it than that because the, the lowest interest rate probably doesn't differ from that much from bank to bank most of the time. And also remember you might be with them for 20 years. And if you think about like the, the positive impact that some of these other benefits will have, it's way more profound than the cheapest interest rate today.

• 17:30Speaker 00

  Yeah. And so it's just to say, you've got to think about, will the bank actually give it, that's give the mortgage you affordability? What's their pricing like? Interest rates and cash contributions? Do they have policies that might help you depending on the property you're buying? Give you the example of the new build with, with no valuation. And then also the product that you're looking to buy, interest only periods, offsets, all of that kind of good stuff. And over the last 15 minutes, you've learned how to increase your borrowing capacity in 2026. The Kiwi who got the bank to lend them $580,000 more by doing this. And the one mistake that can cost an investor $60,000 of borrowing power. Right, let's wrap it up there, but please don't forget to rate, review and subscribe to the podcast. Really does help us get the message out to more people.

• 18:18Speaker 00

  Thanks for listening to the Property Academy Podcast. I'm your host, Stephen Knight.

• 18:21Speaker 01

  I'm your uncle.

• 18:21Speaker 00

  We're going to be back here tomorrow with even more daily strategies, taxes and insights to help you get the most after you sell on property market. Until next time.