Did you know there are common spending habits you may have that are red flags to lenders?

Smart money management and cutting back on expenses can help your home loan application.  However, we’re all human after all so a little splurge from time to time is expected and lenders find this normal.

According to Finance Matters, the below list contains potential problematic spending habits; avoiding them just might make all the difference when you apply for your next home loan.

PayPal transactions

There’s nothing inherently wrong with using PayPal. It’s often a convenient and safe way to make online purchases.

But many expenses that lenders may scrutinise, such as online gambling, and other unmentionable vices, use PayPal with vague descriptors. Even if your PayPal spending is mundane, if the descriptions are vague, lenders may still raise an eyebrow.

Buy now, pay later

It can be tempting to use a buy now, pay later (BNPL) service to splurge on a new outfit and leave future you to stump up the cash.

Although Buy Now, Pay Later (BNPL) services aren’t traditional credit products, they can still affect your credit score. That’s because when you apply for a BNPL service, there’s a chance it may be recorded as an enquiry on your credit report – and these enquiries may impact your credit score.

Splurging on a new outfit may seem like a good idea, but a few missed payments later, the BNPL services can notify credit reporting agencies that you’ve defaulted on a payment, negatively impacting your credit report.

Dipping into savings too often

Having regular savings locked away, untouched, and accruing interest … well, that can make lenders smile when assessing your mortgage application. But as we all know, life happens. Unexpected expenses may crop up that require you to dip into your savings.

This isn’t the end of the world but pinching too much from your savings might get lenders thinking that you’re unable to put money aside and budget.

Store credit cards

Many stores will entice you with swanky perks in return for signing up for their credit card. But often, when you look past the interest-free period sparkle, the interest rates are rubbish.

One or two forgotten payments can really end up costing you and lenders may view having a multitude of store cards as you sourcing credit from different places because you’re scrambling for money.

Frequent large ATM withdrawals

Some people still prefer to use cash, which is fine. But keep in mind that in the eyes of lenders it may make your spending habits hard to track, making lenders question your withdrawals

If you have a fair explanation,then cash withdrawals likely won’t have a negative effect on your application.

However, if you’re withdrawing a few hundred dollars every Friday night at the local bottleo ATM isn’t a great look.

Nobody likes the sting of rejection, so it is best to evaluate your finances and see where improvement is needed.

Nevertheless, we’re experts in helping people shape up their finances for a schmick mortgage application.

Therefore, if you’re thinking about buying but are worried about how some of your recent money habits might look to a lender, get in touch today and we can help you get on track.