{"id":4050,"date":"2015-04-12T01:00:56","date_gmt":"2015-04-11T15:00:56","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=4050"},"modified":"2015-04-12T01:00:56","modified_gmt":"2015-04-11T15:00:56","slug":"5-tips-that-could-trim-years-of-your-mortgage-part-1","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/5-tips-that-could-trim-years-of-your-mortgage-part-1\/","title":{"rendered":"5 tips that could trim years off your mortgage. Part 1"},"content":{"rendered":"

 
\nWe\u2019re all talking about rates coming down and enjoying all-time record lows and things like that, but what\u2019s the best way to take advantage of these, and how can we do it? In today’s show we talk with Andrew Mirams<\/strong>, from Intuitive Finance<\/a>, about\u00a03 key points that everyone should be looking at and trying to implement into their strategy at the moment.<\/p>\n

<\/h4>\n

Transcript:<\/h4>\n

Kevin:\u00a0 <\/b>It\u2019s one thing to have some of the lowest interest rates we\u2019ve had in decades, but just how do you go about taking advantage of that? Andrew Mirams from Intuitive Finance has been looking into this, and he joins us to maybe give us a couple of answers.\u00a0Hi, Andrew.
\nAndrew:\u00a0 <\/b>Good day, Kevin.
\nKevin:\u00a0 <\/b>How do you suggest we go about taking advantage of this low interest rate environment?
\nAndrew:\u00a0 <\/b>I think this is one of the things that no one is really talking about. We\u2019re all talking about rates coming down and enjoying all-time record lows and things like that, but I\u2019ve been thinking \u2013 and I got recently questioned \u2013 about what\u2019s the best way to take advantage of these, and how can we do it?
\nI have five key points that I like everyone should be looking at and trying to implement into their strategy at the moment.
\nKevin:\u00a0 <\/b>Okay, let\u2019s fire.
\nAndrew:\u00a0 <\/b>The first one is people get complacent when rates are coming down, so the first and the strongest tip I give is for everyone: I think you should be reviewing what you\u2019ve currently have.
\nWhether it\u2019s just a small home loan or you have a sizable property portfolio, it doesn\u2019t really matter. Just because rates are coming down doesn\u2019t mean you have the right deal. Right at the moment, banks are really competing actively, in fact, stronger than ever in terms of trying to get business and new clients, so I think there\u2019s a really good opportunity for everyone to review their current facilities and what they have.
\nThe other thing is in the good times that we\u2019re experiencing at the minute in terms of our property markets, it might be just an opportunity to access more funds and set up a buffer, or look for that next or first investment property. The first point, I think, is everyone should be looking to undertake a review of their loans.
\nThe second point that I thought is start to take advantage of these low rates, and what I mean by that is actually look \u2013 and you can get online calculators and all sorts of things \u2013 at your home loan or your bad debts or necessary debts. Bad debt we would say is credit card or personal loan; a necessary debt is what we term as actually having a home loan. The reality is you can\u2019t buy a home without a home loan for most Australians.
\nLet\u2019s look at starting to be a little bit more proactive with your repayments. Go back to a home loan calculator and factor in a rate at 6% and start paying the repayments at that rate. Six percent, if we only talk a year or two ago, wasn\u2019t that dear, was it?
\nKevin:\u00a0 <\/b>No, not at all, mate.
\nAndrew:\u00a0 <\/b>Now, all of a sudden, everyone\u2019s experiencing an average rate of, let\u2019s say, 4.75%. So if you just take an average $400,000 home loan at the current rate of 4.75%, you\u2019re looking at paying around about $2100 a month or $480 a week. If you simply put it in at 6%, you\u2019ll pay around about $2400 (only about $300 a month more) or $550 a week (only $70 a week more). That doesn\u2019t sound like a whole lot, but what that can do is actually reduce your home loan by more than seven years, and it\u2019ll save you around about $93,000 in interest.
\nKevin:\u00a0 <\/b>That\u2019s amazing.
\nAndrew:\u00a0 <\/b>Now, if you say to most people, \u201cCan you save up $93,000?\u201d they would laugh at you, wouldn\u2019t they?
\nKevin:\u00a0 <\/b>Exactly.
\nAndrew:\u00a0 <\/b>I think that\u2019s a really simple tip. Now, I\u2019ve got clients looking at doing it at 7%, so they\u2019re basically gearing <\/b>up the buffer. They know rates aren\u2019t going to stay this low forever. But let\u2019s start building in a buffer and start trying to get ahead by just simply increasing your repayments as if you\u2019re paying a higher interest rate.
\nKevin:\u00a0 <\/b>Sounds good, mate.
\nAndrew:\u00a0 <\/b>The next tip is for everyone who doesn\u2019t have an offset account. You really should have an offset account. All the banks basically offer it inside of their packages. I think it\u2019s still a really under-utilized product in the Australian market.
\nHaving an offset account means instead of your normal day-to-day transactional savings account, you can actually have one that whatever is in there \u2013 be it your week-to-week salary and other savings \u2013 will actually help you reduce your home loan interest that you pay.
\nLet\u2019s just say \u2013 in rough terms \u2013 you have a $210,000 loan, and you have $10,000 in your offset; you only pay interest on the differential, being the $200,000. Now, if you can start to build that up while you\u2019ve also got low rates and couple it with making extra repayments, exponentially again, you can repay that home loan a hell of a lot quicker.
\nKevin:\u00a0 <\/b>Makes a lot of sense. We\u2019ve got two more tips to go. We\u2019re going to come back later in the show with Andrew Mirams, so stick around, and we\u2019ll give you the final two tips.
\nAndrew Mirams from Intuitive Finance with tips on taking advantage of the low interest rates. We\u2019ll catch you a little bit later in the show, Andrew. Thanks, mate.
\nAndrew:\u00a0 <\/b>Thanks, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

  We\u2019re all talking about rates coming down and enjoying all-time record lows and things like that, but what\u2019s the best way to take advantage of these, and how can we do it? In today’s show we talk with Andrew Mirams, from Intuitive Finance, about\u00a03…<\/p>\n","protected":false},"author":176692471,"featured_media":4189,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,25],"tags":[101],"class_list":["post-4050","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-sponsored-channels","tag-podcast"],"yoast_head":"\n5 tips that could trim years off your mortgage. 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