Yahoo Lifestyle Expert warns Aussies common dog breed could cost you when trying for a home loan: 'Most people don't realise'
Your furry friend can 'have a significant impact on household finances'. Here's what you need to know.
It’s the middle of the afternoon on a Wednesday. Your dog, not a care in the world, is sprawled out catching rays by the window, and they suddenly let out their signature sigh.
What on earth do they have to be sighing about, you ask yourself? They might live rent free in our homes, but it turns out our four-legged family members might be costing us more than just the price of their premium veterinary blend dog food.
Julian Finch, founder and CEO of Finch Financial, is warning dog owners that some banks and lenders take their pet expenditure into account when assessing your borrowing capacity.
“What most people don’t realise is that some financial institutions take into account pet expenses when calculating your ability to afford a home loan, whether it be for a new loan for a property or refinancing,” he said.
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The forgotten costs of dog ownership
“The high cost of owning a pet can definitely have a significant impact on household finances and your ability to meet loan repayments. Some pet breeds are known to be more expensive to maintain than others,” Finch adds, noting that Cavoodles are one of the more expensive breeds to own and maintain.
According to the Pet Ownership Report, dog owners spent $4,247 per household in 2022.
Finch explained that some lenders will consider your pet expenditure in quite specific detail. He outlines some of the key costs of owning a dog that could interfere with your housing affordability.
Initial costs, particularly when it comes to 'designer' dog breeds like Cavoodles (which can cost between $1,500 and $6,000), can be in the thousands. In 2022, it was reported that 34 per cent of dogs now cost more than $2,000, compared to just 16 per cent pre-pandemic.
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Then there’s veterinary care.
“Owning a designer dog is never cheap and nor are the costs that go along with it. Financial institutions are aware of this,” Finch says.
Then there’s food, lifestyle costs, and the added expense of boarding, sitting or walking when you go away.
“Some pet owners pay up to $1000 a month on maintenance costs, and I’ve helped people with monthly pet insurance expenses of $400 per month plus navigate the challenges of refinance," he added.
Plus, some pampered pets may even be driving up energy bills amidst the rising cost of living. Interestingly, 27 per cent of pet owners have admitted to leaving on the heating/cooling, lights or TV/radio for their pet.
One of the more forgotten costs is household wear and tear.
“Pets may scratch floors, damage carpets, chew on furniture or create messes that require cleaning or replacement,” Finch explains.
How does having a dog impact my borrowing capacity?
“Pet expenses are considered discretionary and are added on top of the general living expenses benchmarks,” Finch said.
While small expenses like toys and treats probably won’t stand in the way of your loan approval, it’s the bigger stand-outs on your bank statements that could present an issue.
“There are still lenders who require bank statements for between 30-90 days for their approval process [and] these lenders are likely to identify regular payments for things like pet insurance and regular veterinary fees," he added.
Having a furry family member to consider in the household budget also further exposes you to greater risks of rising costs, and running into unexpected emergency expenses.
The importance of a budget and the right professionals
Finch expressed the importance of a well-planned household budget for pet owners, noting the importance of “planning for anticipated expenses” and “considering the long-term costs associated with pet care".
Pet emergency funds are very much becoming commonplace in household money management.
“If you are saving for a home loan, about to apply for one, or looking to refinance, talk to a broker first," he said.
"A broker will help you to navigate which finance institutions take pet ownership into account as part of the application consideration process.”
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