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Here is a simple fact: when you apply for a mortgage most lenders will assess your credit card limit and not the balance. It is generally assessed as the minimum repayment of 3% of the limit per month. So a $10k limit = $300pm assigned to your monthly expenses. This in turn lowers your borrowing capacity and it can make the difference.

Now the common myth is that you should always accept the extra limits as it helps build your credit file. But just remember that when it comes time to apply for a home loan the limit may work against you. Some mortgage providers will waive it as an expense if you can prove you pay it off every month without incurring interest. But the easiest solution is generally to reduce the limit to level the bank is comfortable with.

Food for thought when getting or reviewing your mortgage.

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