3 ways to keep a handle on your home loan

Your first mortgage needs some tender love and care.

One of the most important entries on your Equifax credit report will be your home loan and how successfully you manage it. Whether it's your first or your umpteenth mortgage, lenders can review your credit report, as one part of the lending criteria they use to help them to decide what kind of lending they can offer you, if any at all.

If you want to make a good impression, you'll need to know how to handle your debt. The Australian Prudential Regulation Authority has recently revealed that the average home loan balance is now almost $250,0001 - a hefty sum, but one that can be chipped away with sensible behaviour. Here are our top three tips for ensuring you keep your credit file healthy.

1) Start off strong

The best way to manage your debts is to start off the right way. Don't take on a debt that you can't feasibly handle, be honest with your lender when providing employment and income records and be aware of when any introductory rates end (if you have them). If you have a variable loan, make sure you put more than you need to repay aside just in case interest rates suddenly spike.

And remember to keep in contact with your lender if you do encounter problems. Communication is key to any relationship, including that between you and your mortgage provider.

2) Recognise the danger signs

You may well have started off with your mortgage in the right way, but mistakes and bad financial events happen to everyone. Perhaps you've fallen ill and can't work for a while, or suddenly have a large expense meaning that your repayments might be difficult to meet this month. The key here is to recognise that you do have a problem, and not to dig yourself deeper into debt.

It can be tempting to meet your repayments by using your credit card, but because credit cards often have even higher interest rates than loans, this might end up with you in an even worse situation than before.

3) Don't be afraid to speak to your lender

If you are in seriously dire straits, you can absolutely go and speak to your lender to try and lessen the load. This can take many forms, such as extending the lifetime of your loan to reduce your monthly repayments, postpone your repayments for a period or even both. It is recommended that you consider an option that is best suited to your circumstances and get professional advice.

Remember, lenders aren't the enemy here - they want to make it possible for you to repay back the loan. Defaults are not the ideal solution for either party!

Debt is a tool for building your finances and, in turn, credit files are a tool for managing your debt. Make sure you stay on top of it and order your personal credit report from us here at My Credit File.

1Australian Prudential Regulation Authority, Quarterly Authorised Deposit-taking Institution (ADI) Property Exposures December 2015

Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstance before acting on it, and where appropriate, seek professional advice from a finance professional such as an adviser.​

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