It’s hard to believe that 2016 is already done and dusted and the excitement of Christmas and New Year’s has been and gone and all of the New Year’s resolutions that you thought of 2 minutes to midnight may have already been broken. But we want to take a closer look at some financial resolutions and help keep you on track to your goals.
New Year’s resolutions don’t seem to hold much weight now days as most fail within the first few months if not sooner. It is estimated that 50% of Australians make resolutions, but sadly 88% don’t get to achieve their goals. But, even if you know that your efforts to achieve your financial resolutions have dwindled, it does not mean you should give up. Financial goals should be made throughout the whole year, not just on December 31st.
Health Check Time
This one isn’t just for your doctor anymore, the New Year is the perfect time to review and understand the benefits of your home loan. Do all the features you currently have still suit your purpose? Would a more basic set up be of more benefit or would you from having multiple offset accounts to help you save money and interest at the same time?
Are you stuck in the rut of “it’s easier just to leave it where it is”. With the RBA slashing rates to an all-time low and banks fighting for their share of the pie, switching may be far easier than you once thought and with the potential to save you tens of thousands of dollars, why wouldn’t you want to.
Switching to a lower rate can save you astronomical amounts, for example a $450,000 loan over a term of 30 years with an interest rate of 5.5% p.a. refinanced at of rate of 3.85% p.a. would generate monthly savings of $473.72 or a staggering $170,539.20 over the term of the loan! Talk to us about switching to see what your savings could be.
Every Dollar Counts
Owning a home is a lot harder than buying one. If you have a mortgage on your property it’s never truly yours until your lender has squeezed that last dollar they can out of you.
How long do you want to wait to OWN your property, with the average loan terms between 25 to 30 years, can you really wait that long to make it yours? There are plenty of strategies that we employ to help you pay your loan down faster, for example by making extra repayments or using an offset facility to its maximum benefit. Paying lump sum amounts from your tax return or your annual bonus can also shorten your loan term plus you could consider making small changes such as switching from monthly to fortnightly. Putting in place a strategy utilising one or all of these can play a huge part in owning your home sooner. But what if finding that little bit extra is too hard because the budget is already spread thin like most families in Australia?
Using our previous calculations you can make additional repayments without even making an additional repayment! Sound confusing? Well let’s look at it this way, the repayments on the pre-switched home loan on 5.5% you would have been paying $2,583.36 per month, so by using that additional $473.72 you saved by switching and keeping your repayments where they already were you would save yourself an additional $92,278.37 or 8 years and 3 months. That is a total saving $262,817.57 and a loan term down to 21 years and 9 months.
Credit Cards Are The Enemy
Well sort of. Credit cards can be a great thing but the problem is that most people don’t understand how to use them correctly with the Australian credit card debt sitting at just over $32 Billion dollars we need to start getting smarter.
Do you really need it? Banks love to offer massive credit cards to you if you show you can afford them in the hope that you will rack up some big holidays or home renovations so they can generate huge revenues from the high interest cards generally have but ask yourself, do I really need such a huge limit or can I reduce it down to a manageable level. Having such a big limit can actually go against you when it comes time to borrow money as this will affect your debt-to-income ratio that the lender uses to make sure you have the capacity for the new loan.
The smartest way to have a credit card and to make it work for you is to pay it off each and every month to avoid high interest charges. This does take discipline and a budget conscious mind but it is something that anyone can do. By simply paying the day to day expenses such as food, petrol, utility bills etc on your credit card but already having the cash for that allocated and sitting in an offset account and clearing the credit card as soon as the interest free period is up, you are not only saving yourself interest on your mortgage, but you are assuring you don’t pay interest on your card also.
Go Back To School
Education is the easiest way to give yourself some financial freedom. Now I’m not talking the blackboard and those uncomfortable school chairs we all remember but the simple things such as reading some blogs (good job by the way) or attending mortgage or investment seminars.
It doesn’t matter if you are a well-seasoned investor or a first timer you need to research the market, which could be reading more online or make use of free property reports to establish figures such as rental growth, rental yield and occupancy rates to make your money go further for you.
The aforementioned investment tips doesn’t necessarily mean for a rental investment only, this can also apply to your family home as that too is an investment, so looking at what areas are on the fringe of a boom suburb that will allow you to have good principal growth to deciding not to renovate has it would over capitalise in your current area it’s all about making the right decisions to make your money work for you better.
So Here’s Our Pitch
As a Finance Broker we pride ourselves on being experienced finance professionals. We have spent the past 15+ years helping people get a better deal on finance. We work for you not the banks.
With Ask 4 Finance you get access to your very own Finance Broker from the start. Your personal Finance Broker is available to you 24/7. You get their direct email address and mobile number, which makes it easy for you to stay in contact with them if and when you have questions.
If you are keen to learn more or you are ready to take action you can contact us on 1300 769 177 or you can submit your online application here.
Article written by Brett Ginn – Home Loan Specialist at Ask4Finance.