The peak body representing Australia’s finance brokers says some Australians will unknowingly destroy their ability to get a mortgage in the near future through wrong decisions made over the coming Christmas period.

Managing director of the Finance Brokers Association of Australia, Peter White, explained that new credit policies by banks not only consider spending choices but consumers who choose to utilise the increasingly popular ‘buy now pay later’ options may lower their chances of being approved for a mortgage.

“The credit policies of banks, particularly after the royal commission, are more intrusive than ever, and they make it very hard even for many who can legitimately and comfortably afford the mortgage repayments they seek.”

Mr White, who recently called for a more considered approach to credit policy lest current lower interest rates be wasted and ineffective, said potential borrowers must be aware of what they need to do in this new credit age and warned that the Christmas period is the most dangerous.

“Banks still have a large buffer between the actual rate and the rate they use to calculate affordability, so this means you have to prove that you can service repayments far in excess of what you will be paying.

“But they also now look more closely at bank statements and discretionary spending, which can involve for example looking at cash withdrawals, gambling expenditure and what goods and services you are purchasing.

“The combination of both the buffer and an analysis of spending patterns means that overspending at Christmas, which is a very easy thing to do, can set you back years.”

He said using Afterpay or similar companies may imply that you can’t manage your money and are over-committing your finances.

“In short, if you are thinking of a mortgage, don’t buy small items on any sort of credit, avoid spending that may be seen as extravagant or unnecessary, ensure your bank statements show regular savings, and pay your bills on time.

“Christmas is a time of excess in many ways, but potential borrowers will do themselves a huge favour by showing restraint over the coming weeks.”