Your debts explained

There are many types of credit products that are classified as debts and have a range of purposes. Each one gives you access to funds that you might require and you have a legal obligation to repay the money.


When applying for a new home loan, or any other type of loan, you are required to disclose all of your debts and credit facilities to your mortgage broker and lender.


What counts as a debt?

Personal and car loans

These are useful when buying one off big items like a car, paying for an overseas trip, renovations or household goods e.g. white ware. This type of loan is usually taken out over a 2 to 5 year term.


Credit cards

Credit cards allow you to borrow money from a credit provider to pay for something without using your cash or savings in your bank. There is a limit to what you can borrow and have to pay back. If you repay the full balance the following month you will not pay any interest. However, if you only pay the minimum or set amount then interest will apply. Even if you have a zero balance or use the card only for emergencies, this is still a debt to be included.


Store cards

These are offered by department stores and other retailers. They can often offer discounts, reward points and short term financing. Store cards sometimes have an interest free period that is offered for the purchase of an item. If it is not paid off in the required time you might pay a higher interest rate than on a credit card.


Interest free cards and deals

Often retailers offer interest free deals that let you take home the product before you have paid for the item in full. There are still fees and charges with repayment timeframes.


Shopping with interest free options

You can shop immediately and temporarily delay the payment for the product. This allows you to make the repayments over a short period of time. These facilities include Afterpay, Zip Pay etc.


Rent to buy options

These are consumer leases where you rent or lease electrical appliances or household goods rather than purchasing them. You have the option at the end of the lease to purchase the product outright or return it.


Payday loans

These type of loans are for people who are in need of immediate money. Fees and charges will be higher than other types of credit facilities.


Repayment plans

There are some repayment plan options that you can enter into to repay health care, medical and dental work. The repayment plans need to be included in your debts.



Overdrafts are a facility that you will take out with your existing bank by arrangement. This allows you to withdraw money when your account balance is zero. Often overdrafts are linked to home loans as banks require security to allow them.


Home loans and investment loans

Used to purchase a house or block of land to build as either an owner occupied or investment property. They are generally repaid over a 20 to 30 year period.


All the debts that you have must be disclosed to your mortgage broker or lender as you will be at risk of being declined for finance.


If you are unsure of what counts as a debt ask your mortgage broker as they are here to help you.

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