When you’re applying for a mortgage, lenders don’t just look at your income, your deposit and your equity – they also look at how much you spend each week, month and year.
- Many lenders use the Household Expenditure Measure (HEM) to calculate the living costs of applicants
- HEM takes into account essential expenses like groceries, transport, internet and phone bills
- It also takes into account discretionary spending on things like eating out and holidays, as well as buy-now-pay-later services like Afterpay
- Day-to-day expenses can impact how much you can borrow and your chance of being approved – so it’s a good idea to plan and stick to a reasonable budget well in advance of applying for a loan