Keeping your mortgage on track

By Will Keall
With interest rates at record lows, homeowners may be lulled into a false sense of security about how much they can borrow. If you’re in a situation where you’re finding your finances are becoming a little bit stretched, there are ways to get back on track.
Tell your lender
One of the first things you should do if you’re having trouble meeting any repayments is contact your lender. The earlier you let them know the better it could be as there’ll be more options available to assist. Lenders are also obligated to assess your situation and get back to you within 21 days.
Be very honest with your lender about your situation. You may feel that there can be a certain embarrassment factor that comes with discussing any financial problems, but if you are upfront you may find a very quick and easy solution to your situation. You don’t want what could just be a small problem to become too big to handle.
One of the options your lender may suggest is extending the term of your loan to 30 years (if it’s currently shorter). This means your repayments will be smaller, although you will be paying your loan back over a longer period.
If you do fall behind on your repayment and your loan is in arrears, an option may be to capitalise the current arrears amount. This extends the arrears amount over the remaining term of the loan.
They may also suggest moving to an interest-only loan for a short period of time, which will reduce the amount you pay each month as you are only paying back the interest but none of the principal.
Another option is a repayment holiday where your lender postpones your repayments for an agreed period.
Remember with all these options there are pros and cons, so make sure your lender sets out exactly what they all mean and what the cost may be to you.
Consider debt consolidation
If you have a number of debts that you are paying off in addition to your mortgage, for example, credit card debt and personal loans, you might want to consider consolidating all of them into your mortgage, as this is likely to be the debt that is attracting the lowest interest rate. You may be able to do this on your existing home loan provider, or alternatively you may choose a new lender altogether.
If you do consolidate all your loans, while you will be repaying your debts off at a lower interest rate remember that you will be paying them off over the same time period as your mortgage – usually 30 years. 
Work out a budget
As tedious as it sounds, setting up a budget – and sticking to it – is one of the most effective ways of getting your finances back on track.
When we don’t take note of what we’re spending it is very easy to overspend. Over a period of a week, write down everything you spend. It can be quite a shock to see how actions such as buying lunch every day can quickly add up to hundreds of dollars.
When you see where your money is going, then you can make sensible plans to save. Remember to be realistic. You don’t want to start depriving yourself of everything. Just keep your spending down to occasional indulgences. 
To help with budgeting, iMortgage has a budget planner calculator on its website.
Seek counselling if you need it
If you are still having trouble getting your finances under control, you may want to seek the advice of a financial counsellor. Whatever you do you don’t want to exacerbate the situation by taking on more debt to meet your repayments – e.g. by borrowing on your credit cards or taking out a personal loan.
After you have made moves to free up your finances, take the time to understand your position should interest rates rise. iMortgage has a borrowing calculator on its website that lets you check your repayments depending on what the interest rate is: forewarned is forearmed.

Will Keall, iMortgage’s general manager, has a wealth of marketing and business development experience gained in Australia and the United Kingdom. These include high level roles in a range of sectors such as financial services, insurance, travel and tourism, motoring and professional services.

Will played a pivotal role in the successful establishment of iMortgage. His dedication and passion for the mortgage industry have won Will the utmost respect as an integral part of the iMortgage brand.

A self confessed “numbers and brand geek”, Will calls himself a conservative investor with a long-term philosophy. He also believes it’s important to “love where you live.”

Will is a cricket and football tragic, who also enjoys running.