Did you know that when you apply for a mortgage, lenders factor in a 3% monthly cost on all credit card limits (not the actual debt)?

General ‘Rule of Thumb’ - Your credit card limit will impact on the amount a lender will loan you. Every $1,000 card limit, will result in a reduction of approximately $4,000 that you can borrow on a mortgage. So a $10,000 credit limit will reduce your mortgage borrowings by about $40,000!

We get that lenders are being careful not to overload you with debt…..

So why is it, one of the first things most new customers get offered by their bank when they secure a mortgage is a new shiny credit card!?

This highlights the irrational thinking of lenders who will ask potential borrowers to reduce credit card limits as a condition in their loan offer – yet within weeks of the mortgage being advanced will be inviting clients to either take a new credit card facility or increase their existing limit.

To add some sting to the process, many lenders then promote/ market themselves further and make contact congratulating customers on being valuable clients and advising them their credit card limit has been automatically increased as a result.

Doesn’t make a lot of sense does it – first asking you to reduce your debt – and then trying to get you to increase it! Legal? Yes. Irresponsible? In my opinion yes and contradictory to the lenders requirements at the time of loan assessment.

Makes you think though – should the bank be your first port of call? Or should it be Wayne?