Red Flags

When you apply for a home loan, your Lender will look closely at your spending habits to make sure you can repay your loan and assess the risks of lending you money. We call Red Flags to those transactions that might increase uncertainty with your lender and in some cases they might get your loan rejected.  Not all lenders will have the same approach but it is our duty to prepare you for your home loan application and make sure you are the best candidate you can be, so here are some general rules on transactions that might raise lenders’ concerns. 

  • Betting & lottery: your gambling habits can get you in trouble. While an occasional bet here and there won’t probably hurt, large bets or regular gambling will most certainly hurt your application.
  • Buy now, pay later loans: these are loans that you can get at the point of sale and allow you to buy something now but pay it in quotes later. Sounds great but the problem is that it is a credit and it will reduce your borrowing capacity, it is also considered a bad habit as it increases your liabilities and compromises your ability to save and pay for your home loan. Lenders have became more strict regarding these transactions and they will require more evidence from you or they will request you to close your loan, these can also cause delays on your home application.
  • Cash withdrawals over $500: Most banks have a set amount where they will query transactions that are out of the ordinary. This includes cash. They may question one-off cash withdrawals of any amount, but we suggest making sure you know what any withdrawals of above $500 are for. In addition, they will question regular high value cash withdrawals as well.

Remember every lender will have different rules on what are risky transactions but we recommend you have these covered and if you cannot avoid these type of transactions at least have a reasonable explanation on why you need them for and why this shouldn’t affect your loan repayments.