The Christmas spending season is well and truly here for this Festive Season. A few gentle reminders for those looking at home finance in the New Year, and the implications that can occur if your spending tips over budget, or your usual financial accountability relaxes as those holiday naps approach.
The Festive Season is well and truly the silly season when it comes to potentially blowing out spending budgets, stretching limits on credit cards, and losing grip on your day to day financial accountability. It’s easy to get caught up in the Festive spirit, and even easier to get caught in a financial daze.
Credit Card and Home Loan Repayments:
This is where many of our credit cards get put into overuse. Credit limits are stretched, frequent flyers points are capitalised on, emergency spending is applied, and repayments can be made late or missed all together.
If you are intending to use these cards, make sure you keep within the limit, meet the repayments on time and every time. Lenders won’t always be willing to take on any risky debt when you look to consolidate it into your home loan, and they will be assessing your transaction and repayment history.
Don’t always rely on the flexibility of your mortgage to consolidate these debts, because it could be too late if you have accidentally engaged in some lazy repayment behaviour on either a credit card or your home loan. One missed repayment could result in several more months of proving your repayment capacity before a Lender is will consider your application for finance.
Assessment of Living Expenses:
Responsible lending is more important than ever before in the Lending world post Royal Commission. Brokers and Lenders are required to assess an applicant’s living expenses more prudently, which means how much you spend over the Festive Season could impact upon a potential credit application.
Beware that what you actually spend through your accounts (such as spending on gifts, Christmas and New Year events, Holidays etc.) could be required to match up with the living expenses you are required to declare. A Lender’s assessment will typically utilise the highest figure between what you declare, what you actually spend, or the applicable Household Expenditure Measure (HEM). This means that your borrowing capacity could be reduced if you are spending beyond your means, and especially beyond your usual budget.
To discuss keeping your home finance prospects clean, speak to a Bernie Lewis Home Loans Mortgage Broker today on 8300 8300.
Enjoy yourselves, keep cool and keep on track this summer!
*The information provided in this article is general in nature and does not take into account your personal circumstances. Since everyone's personal situation is different, this article should not be taken as advice. The figures used in this article are to be used as a guide only. Depending on your personal circumstances, these numbers may vary. We recommend you seek individual advice with a mortgage broker.