If you have started the process of looking into options for your home loan, you would know that you need to start cleaning up your spending habits so that you look like a better candidate for lending.
While for most people, cleaning up your spending means cutting down on major things like holidays or perhaps paying off the credit card, there is more focus on what we actually spend money on, not just how much we are spending.
There are a few red flags that banks look out for which may hinder your chances of your finance being approved, so here’s our list of things you need to keep in check when applying for finance!
Afterpay
How good is Afterpay? Like layby, but you can get your hands on the item straight away… basically a shopaholics dream! Unfortunately, this can turn into nightmare when applying for finance. Even though Afterpay does not identify as a credit system (as they don’t do credit checks etc. when you start an Afterpay account) if you miss your repayments, then it can appear on your credit history, making you look like less of a safe bet when banks are checking you out. There was even a case last year where a bank rejected an applicant’s home loan application when they discovered that she had an outstanding Afterpay balance. The simple solution, of course, is to always keep on top of all repayments, or resist the urge to splurge altogether and cancel your Afterpay account!
Digital subscriptions
Media subscriptions like Netflix, Stan and even Foxtel aren’t always huge expenses, so it’s easy to forget about them… but the banks don’t! As they are counted as “discretionary spending”, costs like this will likely get picked through to make sure that you will actually be able to afford your home loan repayments – the more “unnecessary” digital subscriptions you have, the more questions and doubts your lender may have about your suitability. So it’s a good idea to cut down on your subscriptions when you apply for finance (or at least once Game of Thrones is finished!).
Meal delivery services
Again, like digital subscriptions, meal delivery services like Uber Eats, Deliveroo and Menulog are counted as discretionary spending, and your lender will look carefully to see how much you are spending; the more you spend on unnecessary services like meal delivery, the less the bank believes you will be able to save. The best thing about this though, is that reducing your reliance on Uber Eats will do wonders for your wallet, and probably your health as well! Why not start meal-prepping or batch cooking instead, so that you always have a go-to meal for those times you would normally reach for the takeout menu!
By making small savings and sacrifices, you will be in a much better position for when lenders consider you for finance, plus you’ll start building better savings and spending habits which will help when it actually comes time to start paying your mortgage!