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Common Debt Reducer In Home Loan Applications

Writer's picture: Mortgage InsightsMortgage Insights

Updated: May 8, 2024


What is Common Debt Reducer in Home Loan Applications

Exploring the Benefits of Common Debt Reducers in Home Loan Applications

Securing a home loan is a important moment on the path to owning a home, but it’s a path with many, many intricate details. Among these is the concept of common debt reducers. The common debt reducer has the potential to significantly influence the loan amount you can borrow. For those aiming to maximise their borrowing limits, understanding this concept can make all the difference to owning a home.



Decoding the Home Loan Application Process


The journey begins with a thorough financial assessment by lenders, who weigh your income, credit standing, assets, and debts to assess your loan eligibility. Every lender assesses your borrowing capacity differently because they have different lending policies. Common debt reducers is one of those disparate policies.



The Strategic Advantage of Common Debt Reducers


The common debt reducer is a policy some lenders employ to evaluate shared debts during individual loan applications. Ordinarily, if you’re entangled in a joint debt, say a mortgage with a partner, lenders would hold you accountable for the entire debt potentially curtailing your borrowing capacity.


Conversely, a lender that adopts a common debt reducer policy will only account for your portion of the joint debt, thereby enhancing your borrowing power. For instance, if you’re shouldering half the responsibility of a joint home loan, a lender with this policy will only consider your 50% share when calculating your borrowing capacity.



Maximising Your Loan Potential with Common Debt Reducers


To take advantage of common debt reducers, you’ll need to demonstrate that the co-borrower can reliably contribute to their repayment share. The lender needs to know that you won’t be solely burdened should the co-borrower default.



Selecting a Lender That Recognizes Your Financial Dynamics


It’s important to note that not every lender offers common debt reducers as a lending policy. When loan servicing is tight, it may be necessary to find lenders that offers common debt reducer, especially if it could work to your benefit. With hundreds of lenders on the market, mortgage brokers is an invaluable source of information who can guide you to the right lenders.



In Summary


The application for a home loan has many, many moving parts. How joint debts are perceived by lenders is especially important to the calculations on how much you can borrow, if at all.


Common debt reducers can make all the difference in your borrowing capacity by ensuring lenders only consider your share of any joint debts. By using common debt reducers, you’re better positioned to secure a more substantial loan amount, enhancing your likelihood to owning a property.


To discuss common debt reducer with a Fairlane Finance Lending Specialist, start here.



 

The information on this website is provided for general information only and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from financial, legal and taxation advisers. Although every effort has been made to verify the accuracy of the information, we disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy, or omission from the information or any loss or damage suffered by any person directly or indirectly through relying on this information.

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