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Save thousands whilst shaving years off your loan – Tips for getting the mortgage monkey off your back

Get the right loan for you – Don’t fall in to the old-fashioned trap of assuming that the loan with the lowest rate is the best product for you. Engage the expertise of your 6-Point Finance consultant, a trained professional, to discuss your longer-term objectives.

Different loans have different purposes, so you need to match your needs to the loan. Scrapping the features you don’t need could save you up to 1 percent on the interest rate of your loan, and in the long run that could save you a whole lot of money.

The Big Four banks aren’t the only ones with good products – Big advertising budgets does not necessarily mean that a lender has the best products. Just because you haven’t heard of a lender doesn’t mean they are unreliable, often they have lower fees and better deals.

Protect yourself against rising interest rates – One of the best ways to secure yourself against rising interest rates is a split loan – part variable, part fixed. If interest rates rise you will be safe in the knowledge that part of your loan is fixed.

‘Good debt’ versus ‘bad debt’ – Pay off your non tax deductible personal loans and home loan for your owner-occupied property as quickly as you can. If you have tax deductible loans (such as investment or business loans), have them on an interest only loan structure so that you can afford to pay off more of your non-deductible debts first.

Rethink the way youmake repayments – Firstly, make sure that your interest rates are calculated daily; this means any repayments will have an immediate effect. Try paying installments fortnightly instead of monthly, you’ll hardly feel the difference, and in the long run will it be a major benefit to your pocket.

Pay off your mortgage as quickly as possible – Time is money! Paying your loan off faster will save you money. For example, if you take out a loan for $300,000 at 7.07 percent over 25 years your repayments will be $2,134 which equates to $640,126 over the term of your loan. Compared to paying it out in 10 years, your monthly repayment will be $3,494 BUT the total amount you will repay will only be $419,290 – saving you a massive $200,836!!!

Use an offset account – Instead of earning interest on savings accounts, place these extra funds in an offset account on your mortgage. For example, instead of earning (say) 5% on a $10,000 term deposit you should consider reducing your home loan by $10,000 and saving (say) 7% on that amount. With an ‘offset’ account you can still get at the funds later if required, and you don’t pay tax on the interest income that you would have otherwise earned on an investment account. Make your money work for you!

Forgo minor luxuries – Consider this; daily a typical person would buy a packet of smokes($10), a coffee and a muffin ($5), lunch ($12), and a couple of drinks after work($8). That equates to $750 a week, money that could be going towards your loan. Think of how much healthier you will be if you take
a packed lunch to work and give up those cigarettes, cutting down on the small things will see you reap huge financial benefits.

Deposit spare cash into your loan – Only $10 extra a week can make a huge difference. For instance, on a $200,000 loan over 30 years you will save $28,000 and shave 3 years off your loan.

Don’t lower your repayments – take advantage of falling interest rates by maintaining your previous rate; you’ll pay off your loan sooner and won’t even notice as you’re used to paying that amount.

Get a package – speak to 6-Point Finance about packaged services on offer. You may end up getting discounted home insurance, fee-free credit cards, a free consultation with a financial adviser, etc... Every little bit counts.

Skip the honeymoon – Introductory rates are used as a market tool for lenders, often you are offered a cheap rate on your loan, but once the honeymoon period is over the lender will switch you to a higher variable rate of interest.

Consolidate your debts – If home loan interest rates rise it’s a sure thing that your personal loan and credit card rates will also rise. Consolidating (re-financing) all of your debts under the one umbrella of your home loan, means that instead of paying 15 percent on your personal loan and credit card, you could transfer these debts onto your home loan and pay it all off at only 7 percent.

Stay informed - don’t forget about your loan – If you are informed you can act. Keep yourself up to date with the happenings in the marketplace. Rates change, new products and changes in the market usually allow you to seize an opportunity or negotiate a better deal. Maintain contact with your 6-Point Finance loan consultant.