Christmas is a season of joy, presents, family gatherings and… expenses. While we’re all excited about festive feasts and fun Santa activities, it’s easy to forget about the costs piling up in the background. Fun purchases made today can have a big impact on your borrowing ability tomorrow and even derail that dream property purchase.

But fear not, here are some practical tips to follow so that 2025 can be a year of financial success.

  1. 1. Set a Christmas budget and stick to It

One of the most effective ways to save money during the holiday season is by setting a clear and realistic budget. Break down your expenses into categories like gifts, decorations, food, and travel. Then, assign a specific amount to each category. This gives you a clear overview of where your money will go, and helps you avoid overspending on impulse purchases. It’s important to stick to this budget to prevent going into debt and to ensure you can still make those essential repayments.

 

  1. 2. Credit cards are the true Christmas Grinch

Last year more than one in four Aussies accumulated credit card debt over Christmas* with many people increasing their limits to cover the costs.

If you are considering a new home purchase or hoping to refinance in the new year it is integral to keep the pesky credit cards in check. Most lenders factor in 3.8% of the card limit as your ongoing commitment regardless of the credit card balance. So any new credit cards or other forms of debt such as new car loans can have a detrimental effect.

 

  1. 3. Skip the payment holiday

The use of buy-now-pay-later services such as AfterPay and ZipPay has surged in recent years and are especially popular over the Christmas period.

While paying in 4 installments or delaying that full purchase sounds like an easy way to budget over the festive season it can actually do more damage in the long run. While using one of these services won’t automatically add a black mark on your credit rating it is very easy to to miss a future payment and be paying large additional fees.

In addition, regular use of these services can affect your home loan applications as major banks like Commbank, Bankwest, Westpac, and ANZ look at the service as an additional form of credit. If you are using these services very often it can be deemed that you are not managing your finances well and impact that much wanted pre-approval.

 

  1. 4. Refinancing could be your Christmas miracle

Refinancing is a little bit of magic that could help lower your mortgage repayments, a lower interest rate could be the gift that keeps on giving. Speak to your broker about refinancing, and who knows? You might just get an early Christmas present in the form of reduced repayments, freeing up some much-needed funds for festive fun.

 

  1. 5. Remember everyone takes a break over Christmas

If you are thinking about a new property or wanting to refinance speak to your broker early, don’t leave it too late. Unlike last minute Christmas shopping, home loan approvals take time and banks also have a Christmas shut down and skeleton staff period which can slow down approvals until mid-January. Best bet, give your broker a call for a little Christmas chat.

The real Christmas magic

At the end of the day, managing a current or future home loan over Christmas is like managing any other part of your life. It requires a little planning, a dash of responsibility, and maybe a sprinkle of holiday cheer.

For any help before or after Christmas, contact BDJ to discuss your finances, from home loans to financial planning, accounting and tax.

* https://www.canstar.com.au/credit-cards/christmas-credit-card-debt-one-in-four/

Published 4 December, 2024