At Sherlock Homes we pride ourselves on helping our clients to better control and manage their mortgages.
At a time when home loan rates are at record lows, and prices of houses seem to be at record highs, we think these five tips will be extremely beneficial when paying off a mortgage and making sure you are on the best deal possible.
1. Avocados do not buy houses.
I am of course referring to the avocado-gate incident a couple of weekends ago when columnist and KPMG partner Bernard Salt sparked a viral debate about the futility of home ownership amongst millennials. “I have seen young people order smashed avocado with crumbled feta on five-grain toasted bread at $22 a pop and more. I can afford to eat this for lunch because I am middle-aged and have raised my family. But, how can young people afford to eat like this? Shouldn’t they be economising by eating at home? How often are they eating out? Twenty-two dollars several times a week could go towards a deposit on a house” Salt said.
The truth is, this applies to everyone with a mortgage, and the responsibility lies with you to review your expenses and pay a little bit extra into your home loan every week if possible. Even for as little as one breakfast out per week, you can reduce your mortgage by as much as 10 years. Not a big sacrifice when you think of the interest and time savings.
2. Review, review, review
Sherlock Homes Melbourne is the home loan investigator, we are in touch with the rates and the banks every day. It’s worth reviewing your lending every 6-12 months and it all starts with the first appointment. Once you have spoken to Sherlock the process is simple- we do it all for you. The rates are investigated by us and we will review your situation on a regular basis to make sure that you are on the best deal possible on a regular basis. Staying informed is key!
We do not just set and forget when it comes to our clients. When we perform the review, some common outcomes consist of, restructuring the loan, obtaining a lower rate, lower fees and charges or releasing equity to name a few. We make sure that our review is in line with your current and future financial goals.
3. Offset or redraw
Sometimes both! Making your money work harder for you is actually easy, the money that you put into your offset account is available for you whenever you want to use it and for whatever your want to use it for. The key benefit is that the balance you have sitting in this account will reduce the interest payable on your mortgage.
Some loans do not have an offset account but do have a redraw facility whereby you put extra repayments into the home loan and have the ability to redraw the extra funds that you have ‘saved’ into the loan to use for any purpose you deem necessary. (This can work really well if you tend to spend whatever you see in your bank account)
Both of these features are great at saving interest over the life of your loan. After all, a mortgage is a marathon, not a sprint and wherever you can save a small amount, that small amount will add up over time. Speak to us to learn more.
4. Lump-sum payments
It is always nice to get a bonus, the gift of money or tax refund for example. For most of you the first reaction is to spend it.
This money can be used more appropriately by going without a purchase or two for yourself to pay a little bit off my mortgage every time you get some extra cash. Keep in mind the redraw option for rainy days.When it comes to paying off your home loan sooner; success is the sum of small actions performed every single day. Quit smoking? rather than have the $21.00 that you would spend every day do nothing and get absorbed in the usual daily spending why not set up a daily direct debit for that money to be redirected into the home loan account.
5. Don’t be afraid of smaller lenders
Smaller “non-traditional” lenders outside the “Big 4” have some sharp rates and fantastic features!
Don’t let fear keep you from shopping around and considering the benefits of these lenders. They might not have the marketing budget of a big bank, so they are traditionally not so well known, but this can work as a tremendous benefit to clients. We have a broad range of these lenders to choose from, speak to us today and let’s see if one of their products suit you.
So there they are!
This list is by no means exhaustive, but we do think the tips are beneficial to educating those interested.
We understand home loans are not a favourite topic to talk about around the BBQ but we are hoping that Sherlock Homes Melbourne and what we can do will be.
Call Kyle – Mortgage Broker & Director on 0410 927 444 to discuss any of these tips and your home loan needs today!
Thank you for your attention.