Planning, Interest Saving and Mortgage Management service offered to
clients by way of our exclusive Mortgage Minimiser Program.
We complete a full analysis of client situation and personal budget,
consider more effectively structuring client’s finance and provide
a detailed personalised report of results achievable.
THE STRUCTURE OF A TRADITIONAL MORTGAGE
Owning your own home is the great Australian dream,
but the amount of interest you pay to achieve that dream can be quite
For instance, do you know that if you are paying 6.5%
in home loan interest, your total payments will amount to more than
double the original capital borrowed over a 30 year period. In other
words, for each $10,000 of borrowing you will repay $22,700 back. For
a $150,000 mortgage, you will have to repay a total of $341,000.
Since housing interest for Owner Occupiers is not tax-deductible,
home mortgage payments tend to comprise a substantial component of the
take-home pay of the average Australian family.
Traditional Bank mortgages are structured in such a
way that in the first 10-15 years of a typical 30 year mortgage, very
little capital is paid off principal. This is because in the early stages
of the loan, the balance is at its highest causing a greater amount
of interest to accrue and charge.
The Mortgage Minimiser Program will take its place in
financial markets as being a sound and innovative method of paying off
your home as well as freeing up your equity for further investment opportunities
and potential growth .
The Mortgage Minimiser Program is smarter than traditional methods of
accumulating wealth as the plan works without the need to increase the
amount of income earned or necessarily changing the lifestyle you have
grown accustomed to.
There are now four methods available which may be applied
to the repayment of a mortgage with a view to reducing the interest
cost and paying the loan off earlier.
LUMP SUM REPAYMENT
Though this option reduces the availability of "accessible
reserves", any additional payments do have a positive effect on
the loan balance the financier calculates interest on being direct off
MAKE MORE REPAYMENTS
This is a popular method encouraged by many of the Banks.
For example, if you are currently making monthly payments of say $1,000,
you could increase the frequency of the repayments to $500 per fortnight,
which would mean that over the course of a year you would actually pay
26 fortnightly payments of $500, totaling $13,000 (versus $12,000 at
the at the previous monthly rate).
This plan works on the basis that instead of paying
additional amounts off your mortgage (which would lock the money into
your mortgage), funds are placed into what is referred to as an off-set
Instead of crediting interest generated by the deposit
account, which is taxable, the lending institution effectively credits
the interest against the mortgage. This effectively means that more
of the monthly payment made goes towards the reduction of the principal
of a loan. Also, your money is readily accessible should you need it.
These days some Banks will offer 100% offset, meaning you are paid the
same amount of interest on your credit funds as you are charged on the
LINE OF CREDIT
A relatively new innovation in consumer borrowing, replacing
the normal home loan with a form of personal overdraft. Interest is
calculated against the daily outstanding balance and charged monthly.
This gives you the maximum benefit of each repayment you make to the
It can be advantageous for clients to consolidate other
higher interest costing loans into the Line of Credit which can lead
to substantial interest savings thus allowing a greater amount for principal
reduction. This account is usually an "all in one" account
which you are able to pay salary, rent etc. into, and draw from by cheque,
ATM and EFTPOS. This product has previously been available only to the
professional market (i.e. Doctors, Solicitors etc.).
The following summarises the features and benefits of
only - The minimum payment due for these facilities is
interest only. All additional repayments are at your option, with any
payments above the interest directly reducing the outstanding balance,
therefore reducing the total interest payable.
Access to funds - All principal repayments
remain accessible should an emergency or an opportunity arise i.e. complete
flexibility to “redraw” as needed.
No further loan applications - Generally once
the limit is in place you have proven you are creditworthy and need
not ever apply for a loan again. In short, you control you finances
not the Bank.
Borrow for any purpose - The purpose of the
withdrawal is unquestioned by the bank both at the outset and during
the life of the facility.
Transferable - Should you decide to upgrade
your home, the facility is simply transferred to the new property.
Debt consolidation - Other high interest debts
such as credit cards and personal loans can be consolidated. This will
mean an overall lower interest rate, reducing your commitments and increasing
your cash flow, which can be redirected to further reduce your mortgage.