Any credit card, even if left unused in your wallet, will impact how much you can borrow. It can make a big difference.
This is because the bank will assume the worst-case scenario.
Let’s say your credit card has a $10k limit. The bank will assess your mortgage application as if you have already maxed out your $10,000 card. Yes, even if you haven’t spent a cent.
They’ll then work out what you’d have to pay if you did max out your credit card, and look at your application as if you’ve already done this.
It’s the same with personal loans. The more repayments you have, the less income the bank thinks you have left to pay the new mortgage.
So if you don’t have credit cards or personal loans, you won’t need as much income to invest. But, if you you have lots of personal loans, hire purchases and credit cards, you’ll need to earn more to get started.
Factor #3 – Children