Credit cards 'should be considered before applying for home loans'

Would-be home loan borrowers are being advised to look at their credit cards prior to applying for more credit.

People looking to take out a home loan should first lend consideration to their credit cards, one financial expert claims.

Lisa Montgomery, head of consumer advocacy for Resi Mortgage Corporation, points out that before making an application for such Aussie credit, would-be borrowers should look to reduce their credit card limit.

"A lender doesn't take into consideration what you owe on your credit card and that payment, but rather it's the limit and the payment the borrower could potentially be liable for if they borrow to the max," she tells the Australian Associated Press.

Taking action to manage credit limits could improve the chances of lenders approving a home loan request and offer products with lower interest rates, something that could save them thousands of dollars in repayments.

Such advice comes as RateCity chief executive Damian Smith recently told the Courier Mail that as Aussies are set to use their credit cards more often over the Christmas period, people should compare accounts in order to get a better deal.

By Nate Sawyer