5 tips that could trim years off your mortgage. Part 2

Earlier this week Andrew Mirams, from Intuitive Finance, has been giving us some great tips on taking advantage of this low interest rate environment. He has given us so far 3 key points that everyone should be looking at and trying to implement into their strategy at the moment. Let’s continue.


Kevin:  Earlier in the show, I was talking to Andrew Mirams from Intuitive Finance. He’s been giving us some great tips on taking advantage of this low interest rate environment. You’ve given us three so far, Andrew – if you’ve missed them, by the way, go back, they’re in the earlier part of the show – but let’s continue.
What are tips four and five?
Andrew:  Again, a lot of these tie into each other. In tip one, I said review your loan and don’t allow complacency to slip in. Tip four is really about that complacency, and it’s all about not taking on bad debt. Funds are cheap, everything else like that. If you’re toying with whether you buy an investment property or you buy a new car, don’t take on the bad debt.
A car is not necessarily going to help you. It might be nice to drive around for a while. The boat, the personal loan, and certainly credit cards. With rates at these lows, you have to look to be trying to extinguish these debts or consolidate these debts.
For the general public out there, please don’t just get lazy and complacent and take on these bad debts when they’re unnecessary. Let’s use the low rates to our advantage, not just to take on the wrong type of debt.
Kevin:  It’s a great opportunity to get some leverage out of this environment and, as you say, get rid of some of that bad debt, isn’t it?
Andrew:  Yes, no doubt.
Kevin:  You alluded earlier to that, too – credit card debt. Do you advocate refinancing that into your existing home loan?
Andrew:  We see clients from time to time with $20,000, $30,000, $50,000 sitting on credit cards because they just don’t want to tack it onto their home loan. The reality is most of those debts sit there for five to ten years, paying 20%.
Put it on your home loan at 4.5%. Let’s set up a fast debt repayment program that extinguishes that. You can’t keep redrawing or putting money back onto them. By doing that way I think is a far sounder opportunity to take advantage of this low-rate environment that we’re in at the minute.
Kevin:  Couldn’t agree more, mate. And the final tip?
Andrew:  The final tip – and I’m not necessarily saying to rush out and do it today – is I think people should be starting to look at the fixed-rate options, especially those people with larger loans, and certainly with investment portfolios.
Now is the time. Rates aren’t going to stay this low forever. Sure, we think there might be another decrease coming soon, but it’s now time to start to review and strategically look to position your portfolios or your loans with a maybe blend of fixing part of it, some of it, or all of it.
There are a couple of lenders that will give you an offset account and the ability to pay extra repayments with a fixed rate. We don’t normally look to that sort of structure unless it really suits the client.
But certainly I think tip five should be – I’m not saying rush out and do it – to certainly start to look at the options out there for the fixed rates that are going to start to appear at all-time cheap prices.
Kevin:  Great advice. Those are some tips for you from Andrew Mirams on making sure you take advantage of this low-rate environment.
Andrew, great thought-starters there. Thanks for your time, mate, and we look forward to catching up again soon.
Andrew:  My pleasure, Kevin. All the best.

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