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How credit cards can impact your home loan application.

Almost ready to apply for that loan? Read on to see how your credit card(s) could affect your borrowing power. We’ve also got some handy tips to help you understand a bit more about the approval process.

If you have a credit card, don’t worry, you’re not alone – 70% of Aussies currently hold a credit card, and many reach for them pretty regularly. However, lenders look closely at all of your spending habits to see whether you can service a home loan. Here’s how to avoid getting caught off guard during the home loan application process.

The lowdown on limits and balances

Having a credit card affects how much you can borrow. Even if you’ve never hit your limit and always make your repayments on time, lenders see it as a possible debt in the future. So, the higher the combined limit of all your cards, the lower the amount they can responsibly lend.

Importantly, lenders use the credit card limit, not the balance owing, to figure out your monthly credit card expense. They want to be sure payments can be met even when the card has been maxed out.

At UBank, the monthly credit card expense figure we consider when assessing your home loan application is what’s needed to repay the credit card limit and interest charges over a 3-year period. Aka a monthly repayment that’s 3.8% of the credit limit.

Even if you don’t use your card, to lend responsibly we need to factor in an amount for your credit card expenses as part of the home loan application process to ensure you can still service the home loan and your credit card.

Take back control

Keen to take back control of your credit cards and seal the deal on your dream home? Here’s a few handy hints and tips to help you get started;

  • Close any credit card accounts you’re no longer using.

  • Reduce your credit card limits to the lowest amount you can comfortably work with. This will automatically reduce the amount of credit card expenses that are factored into your home loan application assessment.

  • Pay all your cards on time to avoid late payments appearing on your credit report.

  • While paying off all your debt can seem overwhelming, slow and steady wins the race. Pay down all your debts, one card at a time.

  • Limit additional personal loans as this will add to your overall debt.

With these small changes, you can work towards getting your finances in tip top shape, ready to help support you on the path to owning your own home.

Ready to sign on the dotted line? Have a look at our award-winning home loans* and take the pain out of the home loan process today.


Pro tip: Check out our
handy online calculators to help you figure out how much you can borrow and what you'll need for a deposit.


* Winner of 2 Mozo Expert Choice Awards 2019 for both variable and fixed rate discount offers.


The information contained in this article is of a general nature only. It doesn’t take account of any person’s objectives, financial situation or needs. Before acting on this information, you should consider whether it is appropriate for your circumstances and seek independent legal, financial, and taxation advice.