Juggling a mortgage while receiving Centrelink benefits

Rapid Finance on 2 December 2015

Managing a mortgage can be difficult at the best of times. Whatever your financial situation – whether you’re in between jobs or receiving a Centrelink benefit for support – discovering ways to better manage a home loan is essential in keeping on top of repayment commitments.

At Rapid, we’re advocates for smart saving and developing skills in financial management. The key to keeping on top of a home loan on Centrelink benefits is to have a good plan and budget for your personal expenses.

The key is to have a good plan and budget for your personal expenses.

Sticking your head in the sand is never a good strategy when it comes to keeping on top of your financial situation, so check out some of our budgeting tips below!

Putting a plan together

create a budget

The first thing to do when managing your home loan on Centrelink benefits is to put together a solid financial plan. This plan will form the foundations for your budget, as well as helping you make informed decisions about your finances in the future.

Every situation is different, but here are some basic questions to consider:

  • How much are you receiving in Centrelink benefits?
  • What are your home-related expenses? Think about everything including your home loan repayments, council rates, repairs, utilities and contents insurance.
  • What are your other big expenses? These often include groceries, transport, medical and entertainment costs.
  • Do you have any other debts, such as credit card debt? What is the amount?
  • If relevant, are you able to find employment? How long might this take?
  • Are there any ways to increase your income? Note that this step may impact your Centrelink benefits.
  • What are your savings? Do you have a savings goal in place?
  • Where do you want your financial position to be in 6 months time? In 1 year?

Once you have put together this information, you can paint a picture of your financial situation and how to best manage it.

Create your budget

Reduce your expenses

A budget is an essential tool for managing a mortgage, whether you have bad credit or not. The main idea is to understand what your key expenses are relative to your income, and then find the right balance.

With this understanding, you’ll be able to know where savings can be made from reducing certain expenses, as well as being able to actively track and control your finances.

Below is an example of a basic budget format that can easily be replicated for your own personal use. Work out if your budget works best as a monthly or weekly budget, then include all regular income and expenses.

  • Work
  • Centrelink benefits
  • Other
  • Mortgage
  • Council rates
  • Repairs
  • Utilities
  • Insurance
  • Groceries
  • Personal
  • Medical
  • Entertainment
  • Transport

Total Income

Total Expenses

Check out Money Smart’s Budget Planner for an in-depth budget planner.

  • Include ALL your expenses. It doesn’t matter whether they are weekly, monthly, semi-annually or annually – all your recurring expenses should be accounted for. If your budget is weekly, then make sure all expenses are represented as weekly amounts (divide your annual car registration by 52 weeks).
  • Set up a separate expenses account with your bank. Deposit all your expenses on a regular basis (weekly or monthly) and set up direct debits to draw from this account. When properly planned, you’ll never miss another expense or repayment.

Reducing costs

reduce costs

With a solid budget behind you, you’ll get a good understanding of your expenses, as well as feel accountable for all your spending. You’ll find yourself asking “Can I afford this?” much more often when faced with impulse purchase decisions.

You’ll also start noticing where your costs can be reduced. Consider some of these money saving habits:

  • Start your night out at home and only bring enough money for one or two drinks at the bar.
  • Replace ad hoc trips to the expensive supermarket with scheduled trips to the discount supermarket.
  • Replace those daily coffees from the café with cups of tea or instant coffee.
  • In winter, reduce your reliance on heating – wearing extra layers of clothing and hot drinks might do the trick!
  • In summer, resist pumping the air con full-blast. Cool down with icy cool drinks and desk fans.
  • Give up expensive habits such as smoking, gambling and antique doll collecting.
  • Take public transport instead of taxi
  • Aim to wipe out any high interest debts, such as credit card debt, as soon as possible.
  • Can you find a better refinance deal on your home loan or consolidate your debts?

There are plenty of ways to keep your living expenses low. If you’re receiving Centrelink benefits, then you may already be savvy in the art of stretching your dollar. If you’re doing all you can to manage a home loan but still facing financial difficultly, consider some financial hardship options as a last resort.

Looking for more information home loans Centrelink?

At Rapid, we are experts at seeking out finance solutions for almost anyone. From those receiving Centrelink benefits, to those just looking for options, we can often uncover great finance solutions.

Check out these resources for loans and Centrelink for more information, or call the Rapid team on 1300 467 274.