How your Uber Eats and Afterpay habits could derail your home loan application

If you’ve been ordering more Uber Eats and doing extra online shopping during isolation, you’re not alone. But did you know that this could impact your ability to secure a home loan in the future? Following the Banking Royal Commission, mortgage lenders have been more closely scrutising home loan applications to ensure applicants would be able to make their monthly repayments without impacting their lifestyle negatively. Lenders are analysing the use of buy now, pay later services such as Afterpay, and the spending habits on platforms including eBay and Uber Eats accounts, as well as Netflix, Stan and other online streaming subscriptions. All services that have surged in popularity since social distancing measures were introduced as a result of the COVID-19 pandemic.

Aussies who regularly order takeaway on a Friday night may want to reassess their habits, as frequency of transactions is one aspect lenders consider when assessing home loan eligibility. Recent survey data reveals that 43% of Aussies don’t like cooking at home, with only half saying they cook at home on a daily basis. This is concerning, as banks are able to access and share consumer-approved digital banking data and transaction records under the new open data system that was introduced last July. While lenders traditionally analysed our income, savings, credit score, debts, assets and liabilities when considering mortgage applications, our regular spending and recurring payments – such as gym memberships and streaming services – will now come into play.

Mortgage brokers are keeping an extra close eye on discretionary spending, which encompass even small weekly indulgences, such as takeaway coffee, a visit to the beautician and work lunches. These can quickly add up over time, with Aussies who buy a medium takeaway coffee each work day racking up more than $1000 a year. Additionally, the average person also spends about $1000 each year on fitness activities. 

With every aspect under scrutiny when applying for a mortgage, even education debt in the form of Higher Education Loan Program (HELP) repayments will be under the microscope, as these can bring down a person’s income from anywhere between 1-10%. 

With all of this in mind, how then can Aussies improve their chances of getting an approved home loan? Having a positive credit history – such as a car loan, credit card, or mobile phone contract – makes it easier to get a home loan, as it demonstrates to the lender how diligent you are with repayments. Being able to show banks and lenders that you can stick to a budget and live within your means is also extremely valuable when it comes to securing a home loan. 

For those who may want to take out a home loan in the future but are concerned about their Uber Eats and Afterpay habits, consider creating a weekly budget to help reduce unnecessary spending. There are a number of free online resources that can assist with crunching the numbers, such as the comparethemarket.com.au’s budget planner.