One of the most effective ways to position yourself for better mortgage rates is to manage your spending diligently. Lenders assess your spending habits using a metric known as the Household Expenditure Measure (HEM). To improve your HEM score, plan ahead for when you need a refinance and consider adopting "squeaky clean" spending habits for at least three months leading up to your mortgage application for a better chance of your broker negotiating a better mortgage rate.

While the holiday season is upon us, think of it as an opportunity to embrace what we playfully call the "Netflix Test." While lenders will factor in your actual spending, curbing expenses during this period can significantly boost your HEM score and improve your eligibility for lower rates. Remember, lenders often scrutinize your bank transactions, so even small changes can make a difference.
Whilst this can be challenging to achieve over the festive season when expenditure is traditionally on a rise, consider it a challenge worth taking on for r greater good of your overall bottom line.

Your credit score plays a pivotal role in securing favorable mortgage rates. Monitor your credit score through credit bureaus like Experian, Equifax, and Illian, and aim to maintain a good credit rating. You're entitled to a no-cost credit report and score every three months, so take advantage of this opportunity to review your financial history. Ensure there are no discrepancies or issues that could negatively impact your credit standing. Additionally, consider reducing your credit card limits if they exceed your needs. Lenders may view high credit limits as potential debt, even if you don't use them. Cutting back on your credit limits can demonstrate responsible financial management, which can work in your favour when negotiating for lower rates.

It's important to recognise that credit card limits can affect your mortgage application. If you have a credit card with a substantial limit that you rarely utilise, consider reducing it. For instance, if your credit card limit is $10,000, but you don't require such a high limit, reducing it can be a prudent move. By decreasing your credit limit, you not only reduce your potential debt but also signal to lenders that you're responsible with your finances. This can positively impact your mortgage rate and monthly mortgage payment, as lenders often use a formula based on your credit limit (usually 0.038 times your credit limit) to assess your financial risk.