Nearly One in Three Younger Adults Used Credit Cards for Housing Costs, Research Finds

Nearly a third of adults aged 18–40 surveyed by financial education charity Money Ready had used credit cards to meet rent, mortgage or essential housing bills, according to reporting published on 22 October. The findings draw attention to a difficult interaction: borrowing can cover an immediate shortfall while adding repayments that affect a future housing application.

The 32% figure relates specifically to credit cards. The research also recorded other forms of borrowing, so it should not be presented as the total proportion using any credit.

Mortgage Solutions reported that 54% of respondents had not fully appreciated the effect their credit history could have on rental or mortgage applications. The research was supported by the Berkeley Foundation.

These findings do not mean everyone who uses a credit card is in financial difficulty, or that borrowing automatically damages a mortgage application. They do underline why salary alone gives an incomplete picture of what a household can afford.

For a prospective buyer, the practical issue is how much of their income is already committed, whether payments have been maintained and whether the proposed mortgage would leave a sustainable household budget.

A Strong Income Can Coexist With Limited Borrowing Capacity

A professional earning £90,000 may reasonably expect to have substantial mortgage options. But two people earning the same amount can receive different outcomes because their existing obligations differ.

One may have no unsecured borrowing. The other may be paying a personal loan, car finance and several credit card balances, alongside childcare or other fixed commitments.

MoneyHelper explains that lenders assess income and outgoings, including credit agreements and household expenses. A simple salary multiple cannot capture those differences.

The distinction matters when a buyer starts looking at properties using an online estimate. A figure based only on earnings may be useful as an initial reference, but it is not a reliable purchase budget until the rest of the application has been considered.

What £1,000 a Month of Existing Commitments Can Mean

Consider a hypothetical buyer earning £90,000 who has £85,000 saved and wants to purchase a £500,000 home.

They intend to use £75,000 as a deposit, keeping £10,000 towards transaction costs and reserves. That would require a £425,000 mortgage, equivalent to 85% of the purchase price.

They also have the following existing monthly payments:

Those payments are made from take-home income. They cannot simply be subtracted from gross salary and then multiplied to calculate mortgage capacity.

The lender may also assess some commitments differently from the amount the borrower currently pays. Credit card balances, for example, can be treated using a lender’s own calculation rather than the applicant’s chosen monthly payment.

The relevant assessment therefore needs the balances, contractual payments, remaining terms and any plans to repay them. The example does not establish that the buyer would be declined; it shows why the answer requires more than a payslip.

Clearing Debt Can Help—but It Can Also Reduce the Deposit

Suppose the same buyer has a £15,000 personal-loan settlement figure and considers paying it from their savings before purchasing.

Their cash would fall from £85,000 to £70,000. If they still retained £10,000 towards costs and reserves, their deposit would fall to £60,000.

On the same £500,000 property, the required mortgage would rise from £425,000 to £440,000, or 88% loan-to-value.

The buyer would have removed one existing payment but increased the mortgage requirement and potentially changed the available product range. Whether that improves the overall position depends on the actual terms and affordability assessment.

The £10,000 allowance is also only an assumption. Actual transaction taxes, legal charges, moving expenses and other costs must be calculated for the buyer’s circumstances.

This is why “clear everything first” is not a universal instruction. The better exercise is to compare the complete purchase position before and after repayment, including any settlement charges and the cash left available.

Using Credit Is Not the Same as Missing Payments

A credit card used for routine spending and paid in full is different from an increasing balance that the household cannot reduce. An agreed loan paid on time is different from an account with arrears.

The amount borrowed, repayment pattern and reason for a temporary shortfall all help explain the circumstances. They should be presented accurately rather than reduced to a label such as “bad credit”.

Where a payment problem has occurred, relevant details include when it happened, its extent, whether it has been resolved and whether the underlying circumstances have changed. Lenders’ criteria differ, so one outcome does not establish what every lender would decide.

Equally, explanation does not guarantee acceptance. A lender may still conclude that the requested borrowing is unsuitable or outside its policy.

The objective is a mortgage that can be maintained, not simply finding an organisation willing to approve the highest amount.

A Credit Score Cannot Answer Every Mortgage Question

The score displayed by a consumer credit service can help someone monitor their record, but it is not a mortgage decision. Lenders assess the underlying information alongside the rest of the application.

A high score does not remove monthly debt commitments. Nor does it confirm that the lender accepts the applicant’s income, deposit source or chosen property.

Before applying, it is useful to check that account information and address details are accurate and that any unfamiliar entry is investigated. MoneyHelper recommends reviewing credit reports and correcting mistakes.

Accurate negative information cannot simply be removed because it is inconvenient. Where an entry is wrong, it should be challenged through the relevant provider or credit reference agency, with supporting evidence.

A mortgage adviser can then assess the actual record rather than relying on a score supplied in isolation. The applicant should also establish what kind of credit search will be made before proceeding with an application.

Debts Due to End Need Evidence, Not Assumptions

A loan with only a short period remaining can present a different picture from one with several years left. But the applicant should not assume it will automatically be excluded from affordability.

The chosen lender’s rules and the intended completion date matter. If borrowing will be repaid before or at completion, the lender may need evidence of the funds and confirmation that its conditions have been satisfied.

The same applies to a credit card that the borrower expects to clear using a bonus. An anticipated payment is different from cash already available, particularly where the amount or timing is uncertain.

For joint applicants, both parties’ commitments need to be included. A debt held in only one name can still affect the assessment of the joint mortgage.

Providing the complete position early helps avoid an apparently affordable application changing once statements or credit searches reveal information missing from the initial discussion.

Borrowing for Essentials Calls for a Different Conversation

The survey’s housing-cost focus matters. If credit is repeatedly needed because ordinary income does not cover essential expenses, the immediate priority is understanding that shortfall.

A larger mortgage, another unsecured loan or a more permissive lender does not necessarily resolve the underlying problem. A household may need time, a revised budget or debt support before a purchase becomes sustainable.

That is different from a temporary timing issue that has ended and can be evidenced. The assessment should establish which situation applies rather than assuming either explanation.

If bills or repayments are becoming difficult to manage, MoneyHelper’s debt advice locator provides access to free, confidential support. Seeking help does not require waiting until every payment has been missed.

A Higher Income Multiple Does Not Remove Other Commitments

Recent lender announcements have widened some borrowing options. Willow’s coverage of Furness’s expanded income multiples and residential limits is one example.

Those developments can be valuable for eligible applicants, but a maximum income multiple remains subject to the rest of the lender’s assessment.

A borrower should not combine the most generous headline from one announcement with an assumption that existing loans, credit cards or household costs will be disregarded.

Similarly, a lower mortgage rate may improve the payment calculation without resolving a credit-history issue or an insufficient deposit. Each constraint needs to be identified separately.

For some applicants, an alternative lender’s approach will materially improve the available options. For others, a lower purchase price or a later move will produce the more sustainable outcome.

The Most Useful Review Starts Before a Property Is Agreed

An early assessment should bring together accepted income, current balances, monthly commitments, payment history, deposit funds and expected purchase costs.

It should also distinguish what is true today from what the borrower hopes will change: a salary increase, debt repayment, gift or bonus should not be treated as completed before it happens.

That gives the buyer a clearer basis for the property search. It can also identify whether the main issue is the amount requested, lender criteria, incomplete evidence or a household budget that needs attention.

The research highlights the connection between present housing costs and future borrowing. For applicants with strong earnings, the lesson is particularly relevant: a good salary supports a mortgage application, but the commitments attached to it help determine what that salary can safely fund.

Willow can assess the mortgage position without assuming that every difficulty needs a specialist product. Sometimes the most useful advice is a different lender; sometimes it is a different budget or more time.