Can your bills influence your home loan approval?

As our lives get busier and more bills get digitised, it’s easy for one to be lost in the inbox or even go missing from your letterbox (that is if you are still receiving them via mail).

Lenders asking clarification on utility defaults listed on credit files is a common issue some home loan applicants encounter, amazingly, for most, it’s also the first time they become aware any such blemishes existed at all.

Issue is, just one small forgotten bill can negatively impact your creditworthiness and loan approval outcome.

When you’re looking to borrow money to finance property purchase or when refinancing to a better home loan – your credit history is an important factor lender take into account when assessing your application.

Phone bills, electricity bills or any bill for that matter should not be left unpaid as they can influence your ability to secure credit, especially if you aren’t able to provide an acceptable reason for its occurrence.

Home buyers and investors should make sure they incorporate all bills into their budgets – and more importantly, ensure they are paid on time in-order to reduce the possibility of their home loans getting declined.

In order to keep on top of your bills, there are several options but the common ones we see borrowers use successfully are the following two;

• The simplest option is to set up direct debit for your bills, removing the need for you to worry about remembering when they’re due. When choosing this option, you’ll needs to ensure you have enough cash in the account nominated to cover your monthly bills.

• The other option is to set up a filing system for all of your bills according to payment due dates. This option is for the ‘organisers’ among us and to ensure all bills are accounted for, a spreadsheet of some sort is recommended together with a diary notification setup.

Most importantly, don’t forget to keep a digital copy of all paid bills and receipts in a dedicated folder on your computer or snap a picture of the bill with your phone and email it to yourself with the issuer details as the subject line, making it easy for you to locate if ever proof of payment is required.

Finally, when assessing your eligibility for a home loan, mortgage lenders will be looking to determine if you’re a responsible candidate and a strong history of timely bill payment will only assist in your application being approved.

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This article does not constitute advice; readers should seek independent and personalised counsel from a trusted adviser that specialises in property, a tax accountant and property design specialist.