Securing a home loan is a challenging process—the questions, paperwork, comparison shopping, pre-approval and finally house shopping—and so it's important to ensure by the end that you have the greatest value for yourself. This article discusses three things that you can do to ensure you get the most value from your loan.

1. Raise your credit score

Home loan lenders are very interested in your credit score, given that a home loan stays with you for decades. It is understandable, then, that they'll want to know how well you've managed debt since your first credit facility. A better credit score gives you more borrowing options at lower interest rates, thereby saving you money. Even if you have a bad credit score, you can work hard to improve it over several years before applying for a home loan by doing the following:

  1. Check your credit report to know where you stand and what to do to improve

  2. You should have several credit lines open, as this improves the credit utilisation percentage which is part of the final score. You want to demonstrate a good, long-term relationship with your credit card lenders (by keeping your outstanding balances low and always paying on time)

  3. Pay all bills (rent, utilities, cell phone plans, internet plans, etc.) on time. Overdue payments can stay on your report for years, tarnishing it. You can set up reminders or standing orders with your banker to ensure you never fall behind

  4. Avoid defaulting completely, as these entries are difficult to remove from your credit file. Negative listings include unfavourable judgements, liens, writs, clear-outs and bankruptcies

2. Consider home loan checking software

Home loans run for decades: that's a long time for any system to be expected to run error-free. Possible errors include wrong interest rates, wrong dates of payment and other calculation errors, and they can amount to significant sums over the years. Loan checking software suites can help you spot these errors over the lifespan of your loan and even calculate the refunds you should get. The software requires that you enter all relevant details, and then you'll continuously update any payments and errors will be flagged when noticed. More advanced packages can save loan information so that you don't have to enter all the details every time you're auditing the loan.

3. Keep all your details safe

Even if you have a loan checker, it is helpful to open a spreadsheet file and enter all details of your monthly payments, interest rate changes etc. Additionally, keep any physical documents—the loan agreement, receipts, loan statements, bank statements, correspondence with the lender, etc.—very safe, as these will provide evidence whenever you're contesting a problem. You can open a safe deposit box to store all these documents. It is also helpful to scan them and have them in your email so that you can retrieve them easily when needed.  

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