When preparing for a home loan, it’s not just your savings and income that matter. Lenders take a close look at your financial habits, and some seemingly small details can make a big difference. Here are four factors that might unexpectedly impact your borrowing power:
Small Subscriptions, Big Impact
Those $10 or $20 monthly subscriptions for streaming services, apps, or gym memberships can add up quickly. Lenders consider these recurring expenses when calculating your borrowing capacity, as they reduce the disposable income available for loan repayments.
Unused Credit Cards
Even if you rarely use them, lenders factor in the total credit limits on any cards you hold—not just the outstanding balances. Closing unused credit cards can help improve your borrowing power by reducing your potential debt obligations.
Financial Support for Family
Contributing to a family member’s rent, bills, or other expenses is a generous gesture, but lenders view it as an ongoing financial commitment. Regular support can affect how much you’re eligible to borrow, as it’s seen as a reduction in your disposable income.
Patterns in Spending
Frequent spending on things like food delivery services or online gambling can raise concerns with lenders. These spending habits may be seen as ongoing expenses, potentially lowering the amount you can borrow.
Being mindful of these factors can make a significant difference when applying for a home loan. Review your financial habits, reduce unnecessary expenses, and present the strongest possible case to your lender. Small adjustments now can pay off in the long run!
