When applying for a home loan, many people focus on their income, deposit size, and credit score. But one of the most underestimated aspects lenders scrutinise is your day-to-day spending.
Banks and lenders don’t just want to see that you earn enough—they want to know you manage your money responsibly. In fact, your recent spending patterns can significantly influence whether your loan is approved and how much you can borrow.
Discretionary Spending Gets Noticed
Lenders typically review the last three to six months of your bank statements to understand your living expenses. They categorise your spending into essentials (like groceries, utilities, and rent) and discretionary (like dining out, streaming services, Afterpay, holidays, or luxury purchases). Excessive discretionary spending raises red flags—it can signal to a lender that you may struggle to adjust your lifestyle once mortgage repayments begin.
Regular Subscriptions Add Up
What might seem like small, regular costs—gym memberships, streaming platforms, or multiple buy-now-pay-later services—can paint a picture of overcommitment. Lenders will factor these into your monthly expense calculations, reducing your borrowing power.
Avoid Large One-Off Purchases Before Applying
Big-ticket expenses close to your application date, such as buying a new car or booking an overseas trip, can make it look like you’re not prioritising your financial commitments. It’s best to delay these kinds of purchases until after your loan is approved and settled.
Credit Card Limits Matter (Even If You Don’t Use Them)
Lenders assess your credit card limit, not just your outstanding balance. For example, if you have a $20,000 credit card limit, the bank assumes you might use it all—even if you currently owe nothing. Reducing unused credit limits before applying can boost your borrowing capacity.
What You Can Do
- Track your expenses for at least 3 months before applying.
- Reduce unnecessary spending where possible—consider pausing discretionary purchases and subscriptions.
- Avoid new debts or liabilities like car loans or personal loans leading up to your application.
- Speak with a broker early—we can help identify spending patterns that might hurt your application and guide you through preparing your finances.
Final Thought
In today’s lending environment, it’s not just about what you earn—it’s about how you spend. Presenting a clean, responsible financial footprint can give your application the edge it needs.
Speak to our SWU Group credit advisory team today if you’re planning to buy in the next 6 to 12 months—we’ll help you get loan-ready, not just loan-hoping. financialsuccess@simonwu.com.au