Summer is traditionally a time of big spending.

With Christmas, family holidays and guests staying all rolled into one time period, the costs can start to add up!

However, if you are planning to apply for a mortgage or make a property move you will want to be mindful of what your summer spending might look like to potential lenders.

The good news is that you don’t have to live like Ebenezer Scrooge this holiday period just to keep your finances looking attractive.

We’ve put together a quick guide to make sure you can still enjoy your summer holidays without making any major financial blunders. Here it is:

Make Your Accounts Attractive To Lenders

A big part of being approved for lending is proving you are a responsible borrower. Lenders will scrutinize your habits so they can assess the risk factors of lending to you. You can prove your responsibility by ensuring your accounts look good by bank standards.

Here’s how you can do that:

1: Don’t Blow The Budget

Overspending is a big red flag for lenders, it can indicate you are not good with your money. A good way to keep your spending in line is to create a realistic budget and stick to it. When you create your budget, include your usual expenses, but also factor in your gifts, travelling costs and any festive activities.

The key step in making sure your budget is a success is sticking to it! You can use a simple spreadsheet or an app to track your spending and avoid unnecessary splurges. Proving you can stick to a budget goes a long way towards showing lenders you are in control of your finances.

2: Avoid Going Into Overdraft

Another part of displaying responsible spending is ensuring your bank accounts remain in the black! If you are frequently going into overdraft or dipping into your savings, then it’s not a good look. Plan ahead for your summer expenses so you can avoid going into unexpected overdraft.

3: Keep Up The Savings

Maintaining consistent savings is a really positive sign for lenders. Even small, regular deposits into your savings account make a big difference. Lenders like to see that you are building a financial safety net. If you can, automate your savings to align with payday so it becomes a habit even during the festive season.

4: Keep Your Income Steady

Does your income fluctuate seasonally? That’s pretty common if you are self employed or work in a seasonal industry. Unfortunately, fluctuating income can be a negative mark against your name for a lender. So, if you can find ways to smooth out your income month to month, it will gain you some brownie points. Side hustles or part-time work is a good way to bridge any income gaps and demonstrate stability.

5: Minimise Spending Splurges

When you apply for any form of lending, banks will review your accounts and spending activity. If you can limit excessive spending on unnecessary expenses like dining out or luxury purchases, it looks better for you. It allows you to present a more disciplined financial picture.

Big Mistakes To Avoid

It can be easy to get swept up in the excitement of Christmas. But, some financial blunders can make lenders think twice about approving your mortgage application. Here are the traps to avoid:

1: Running Up The Credit Card Debt

It can be tempting to swipe away and spend up large on your credit card over the festive season. Pre-Christmas and Boxing Day sales are particularly tempting. But, it’s important to remember that high credit card balances or late payments can damage your credit score. If you want to use a credit card for cashflow purposes or to gain reward points, then aim to pay off as much of the balance as you can each month – in full is best.

2: Buy Now Pay Later Schemes

While Buy Now, Pay Later schemes can seem convenient, they actually clutter your financial records and can even signal to lenders that you are living beyond your means. It is much better to pay for your purchases upfront or even put them on your credit card (then pay off the balance before it incurs interest).

3: Don’t Miss Bill Payments

With so much going on over the holiday season and the summer period, it is easy to get distracted and forget about paying your bills. To ensure that you don’t accidentally miss any due dates, it can be helpful to set up reminders or automatic payments. Also, make sure all your bill payments are covered before any discretionary spending takes place. This is a simple way to maintain strong financial records.

4: Overspending On Gifts

While it is nice to spoil your loved ones at Christmas, extravagant spending can eat into your savings and blow out your spending records. Instead of flashy gifts, consider some thoughtful, budget-friendly options instead. There are plenty of things you can gift that cost very little, think homemade options like cookies or even donating your time for gardenwork or other jobs.

5: New Borrowing

Taking out a new loan is not a good look when you are on a journey to buy a home. Whether it’s a personal loan for a summer holiday or financing a big-ticket item, avoid taking on new debt before applying for a mortgage. Lenders prefer to see a stable financial position free from recent borrowing.

Keep Those Finances Healthy

It is possible to have a fun summer break without breaking the bank and derailing your financial goals. It’s all about striking a balance between spending and sensibility. By budgeting wisely and avoiding costly financial missteps, you can set yourself up for success when applying for a mortgage.

This is not something that you have to tackle alone. If you are unsure about how to navigate summer in a way that the banks will approve of, then the best thing to do is to talk to a trusted mortgage adviser like the team here at Mortgage Suite.

Contact us today for expert tips and guidance on keeping your finances lender-ready, so you can enjoy the summer stress-free and still take the first steps toward owning your dream home.