Could buying the latest iPhone ruin your chance of owning a home?

From going on a daily walk to savouring every last drop of a morning coffee, everyone finds joy in their own way. 

And for many Aussies, getting their hands on the latest technology, like a new iPhone, seems to be their cup of tea. 

But according to Consumer and Finance Law firm, MyCRA Lawyers, the quest for joy might have an unhappy ending when the time comes to take out a home loan.

“When you apply for a new phone the telco will do a credit check which shows up on your file, and if you buy the handset upfront using a buy-now-pay-later service, some of those will do a credit check as well,” said MyCRA Lawyers CEO, Graham Doessel. 

“Once you have a few of these in a short period on your credit file you run the risk of being rejected outright for a home loan.” 

Doessel explained that the reasoning for the harsh critique by lenders could come down to comprehensive credit reporting (CCR), the new system that gives lenders a better look at your credit history - from previous credit applications, to whether you’re paying bills on time, and even whenever you pick up a brand new phone. 

“Telcos are one of the most common causes of defaults on a credit file, while a default won’t necessarily rule out of getting a home loan it will certainly be enough for your bank to see you as a risk and therefore apply a higher interest rate, which may price you out of the market,” he explained. 

It’s no secret that one way to fast track your way to home ownership is to save, save, save, but it could be argued that making sure your credit history is in order is just as important. 

And while you might be second guessing grabbing the iPhone 11 now, there are a few other things that could put a dent in your credit history, like: 

  • Missing loan repayments - Lenders want to see that you’re a reliable borrower, so if you’ve taken out a personal loan or car loan in the past, make sure you’re meeting every repayment on time. 
  • Credit report mistakes - It’s a good idea to check in on your credit history every now again to make sure there are no unexplainable black marks. The last thing you want is to find your home loan application has been rejected because of an error that might not even be your doing. 
  • Not having any credit - While it might seem strange, having a blank credit history might be considered less than favourable. Lenders want to see how well you manage credit and whether you can do it responsibly. In this case, a low rate credit card could give you the starting point you might need.

So if you think your credit score could use a little work, check out our guide on improving your credit score

Or if you’re ready to start comparing some of the latest home loan deals available, head on over to our home loan comparison tool.

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    Back to Basics Special

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    Mozo Experts Choice 2021
    Well Balanced

    Investor, Principal & Interest, LVR <90%

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    2.87% p.a. variable
    2.90% p.a.

    Low variable rate home loan for Investors up to 90% LVR with no ongoing fees, free extra repayments and redraw facilities. Winner of the Offset Home Loan Expert's Choice Award for 2021.

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    Green Home Loan

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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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