Money habits that may raise concerns for lenders

There are certain spending habits that may raise lenders eyebrows when applying for a home loan. As we all know, smart money management and cutting back on expenses can help your home loan application.

A little shopping spree from time to time is expected and lender find this normal because after all, we’re all human. So, what are the spending habits that are red flags for lenders

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.

However, there are 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 find the cash.

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 may seem like a good idea, but if there is a missed payment, the BNPL can alert your credit reporting agency, which will impact your credit report in a negative way.

Dipping into savings too often

When assessing a mortgage application, lenders love someone who has a regular savings account, untouched and accruing interest. 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. However, when you look past the interest-free period sparkle, the interest rates are not worth the hassle.

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

Frequent large ATM withdrawals

Using cash is still considered a normal spending habit, but keep in mind that in the eyes of lenders it may make your spending habits hard to track, making lenders question your withdrawals.


Most of the time, 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.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.