Loan Types
Home Loan
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When you start looking for your home loan, there are many factors that you need to take into account. You need to ask yourself a few simple questions such as:
If you go into a bank, they will recommend that you take out a standard 25 or 30 year Principal and Interest home loan. How do I know this? Well this style of loan is the most profitable for the banks! Of course they are going to be giving you the type of loan which is going to make them the most amount of profit. After all, they are the banks! As a general rule of thumb with Principal & Interest loans, what ever the amount you originally borrow from the bank you will end up paying back AT LEAST double. Eg. You take a home loan out for $250,000 over 30 years @ 7.25% you will actually end up paying back to the bank $600,000. The amount of interest (bank profit)in the deal for the bank is close to $350,000. For this reason alone, banks are very happy to give you a big, fat 25 or 30 year home loan because they know that during the first 5 years of your home loan the majority of your repayments will be going in interest (bank profit) and not much at all will be coming off of your debt. The catch is when you go to refinance your home loan within the first 5 years, the banks will reset your mortgage term back to the start of another 25 or 30 year term. As you probably already know, the best and quickest way for you to get out of debt with a Principal & Interest loan is to pay extra money per month, or to pay more frequently, such as weekly or fortnightly. Now think about it, of course you're going to get your debt down quicker if you are paying more money to the bank or are making extra repayments, it's not rocket science... A major disadvantage of Principal & Interest loans is that they don't allow your income to start working for you (except offset accounts) and they are laden with obscene amounts of bank profit, especially in the first 5 years. I specialise in setting my clients up with a home loan structure that enables their income to actually work for them every single day on their debt. I too often see clients who just have their income's sitting in their cheque or savings accounts doing absolutely NOTHING for them. By getting your income to work for you every single day, of every single month on your loan you are going to end up saving thousands and thousands of dollars over the term of your loan. This means that you will be DEBT FREE quicker and you will be paying LESS per month. The home loan I usually recommend to my clients has the following features:
This style of loan enables my clients to have their incomes working for them, which in turn allows them to knock thousands off their home loan balance each and every month by paying LESS than what they used to pay! When selecting your home loan for your property purchase, you should make sure it is a loan that is going to allow your income to work for you as well as give you the freedom and flexibility to make extra repayments and FREE redraws when required. If You would like to be shown how I can Reduce your monthly payments and get you Debt Free quicker, simply send me an EMAIL asking for a No Obligation FREE Quote Now! |