A woman who bought a house at age 25 revealed she was able to qualify for a home loan by canceling her Afterpay account.
Bridget Carkeet, now 28, bought a four-bedroom house in Ipswich, 40km southwest of Brisbane, for $500,000 in 2021.
But to qualify for the loan, she had to close her Afterpay and Zip Pay accounts.
“They weren’t actually in use, but I still had them active,” he told WhatsNew2Day Australia.
Experts warn that a credit card with a limit of $15,000, even if you have nothing outstanding, could reduce your potential maximum available loan by $71,000 if not paid off.
By closing both accounts, Ms. Carkeet was given the green light for her mortgage and was even allowed to borrow another $2,000 from the bank.
And as a result, Carkeet was able to buy a house of his own in Karalee, a 15-minute drive from work at a private health practice near Ipswich Hospital.
“The advice my banker gave me was to try to make sure my creditworthiness was the best it could be,” he said.
A woman who bought a house at age 25 revealed she was able to qualify for a home loan by canceling her Afterpay account.
As a clinical exercise physiologist who helps children regain or improve their mobility, she was able to get a loan with a 10 percent deposit and free herself from lenders’ mortgage insurance because she is a healthcare professional.
Their clients are children who qualify for the National Disability Insurance Scheme, aged between one and 17, who have suffered a brain tumour, have cerebral palsy or other mobility problems.
“I just followed my own passion in the healthcare field; I didn’t necessarily decide based on the jobs available,” he said.
“I continued doing what they enjoyed, making an impact on their abilities to care for themselves and progress towards normal schooling.”
He was able to borrow $450,000 when Reserve Bank interest rates were still at a record low of 0.1 per cent and banks were offering fixed mortgage rates starting in the 2 per cent range.
“The interest rates were pretty low and for me it was a similar amount to rent,” he said.
“I tried to get in as soon as I had the savings and as soon as I had a secure, permanent, full-time job.”
Since then, interest rates have risen 13 times to hit a 12-year high of 4.35 percent, pushing variable mortgage rates into the above six percent range.
Despite earning a six-figure salary, Carkeet still doesn’t have a credit card and limits his TV streaming to Netflix only.
She also packs her lunch to take to work every day and only goes out to eat at a restaurant once a week with her boyfriend Aidan Lunney, a physiotherapist work colleague.
Bridget Carkeet, now 28, bought a four-bedroom house in Ipswich, Queensland, for $500,000 in 2021 (pictured right with boyfriend Aidan Lunney)
“It wasn’t very easy to make adjustments here and there, eat out a little less and budget properly,” she said.
‘We just made some adjustments to our lifestyle.
“We make sure we stick to our monthly budget and try to stick to it.”
To find the right house, Carkeet spent a year searching and settled on a cheaper home in a suburb where the median home price is now $966,536, after a 14 percent increase over the past year.
“I was pretty patient with what I bought and where I bought it,” he said.
“Your first house, I didn’t go out and try to buy the flashiest house and I didn’t try to buy at the high end of my loan amount.”
As a new borrower, I also expected interest rates to rise, despite former Reserve Bank governor Philip Lowe suggesting in 2021 that rates would remain unchanged until 2024 “at the earliest”.
“I didn’t believe it at all,” he said.
“I just tried to think of the worst-case scenario and what the previous interest rates had been.”
Compare the market’s chief economic officer, David Koch, said potential borrowers were often under the misconception that the loan amount would only fall up to the credit card limit (pictured with his wife Libby).
Compare the Market calculated that a person with an average income of $98,218 and a credit card limit of $2,000 can only borrow $530,000, but without a credit card, this increased by $10,000 to $540,000.
A credit card limit of $10,000 reduced potential borrowing capacity by $47,000 to $493,000.
A credit card limit of $15,000 reduced the maximum borrowing by $71,000 to $469,000.
Compare the Market chief economic officer David Koch said potential borrowers were often under the misconception that their maximum loan amount would only be reduced to the credit card limit.
“There is a misconception that the bank will simply subtract the credit card limit amount from your borrowing power, but that is not true,” he told WhatsNew2Day Australia.
‘Credit cards can reduce people’s borrowing power by $50,000 or more.
“If you don’t want to split your credit card, you might consider lowering your limit.”