Tweak your mortgage and the savings can be huge

If you are struggling with your mortgage payments, here are 5 strategies the Reno Kings have used. Please check with your accountant or financial planner to find out whether these are appropriate for your situation. Also consult a reputable mortgage broker for other strategies.

Restructure your loan

It may be possible to reduce your mortgage payments by going back to your lender and restructuring your loan. One option is a cocktail loan where you split your loan into 50% interest only and 50% principal and interest. You could alternatively increase the term of your loan.

Another strategy is to start paying your loan on a fortnightly basis, instead of monthly. Pay half your current monthly payment on a fortnighly basis. There are 26 fortnights per year, which will equate to 13 monthly payments. This extra one-month payment per year will save you a considerable amount of interest because you will shorten the period of the loan. Remember, the shorter the period of loan, the less interest you pay.

Revalue your property

If you get your home revalued, the financier will possibly allow a further line of credit (loan) that may give you additional resources to meet any pressing commitments.

Beware: The biggest problem doing this is the temptation of using this money to purchase cars, white goods, electricals and other non-income producing assets.

100% Offset account

These accounts were all the rage and I suspect that many people would have ticked the offset box when applying for a loan, not knowing exactly what it is and how to activate it. This feature can save you a considerable amount of money each month and simply works by having all your wages and any other income put into your offset account. You then use your credit card for all your day-to-day living expenses and enjoy the free interest period of your credit card. The important trick is you must start each month with a zero balance on your credit card otherwise you start paying credit card interest rates. Have your credit card automatically debited each month for the full balance paid from your offset account. Over the life of the loan this feature will save you years off your home loan and $1000’s on interest payments if you are disciplined with your spending.

Refer to your financial advisor as to whether this is strategy will work in your circumstances.

Professional Packages

You may find that you currently qualify for a special package with your bank. Two examples are Commonwealth Bank’s “wealth package’ and ANZ’s ‘breakfree’. These products reduce your bank fees and interest rates. There are 3 doors to each bank. The front door with the crowd, the side doors where the more you borrow the cheaper the rate and the back door for the movers and shakers of this world.

The Moneyfinder

For all those who currently have a mortgage or for all those contemplating one, you must be assured you can afford it and that’s why you need the Reno King’s Money Finder. It tracks down all your spending and allows you to identify where all your hard earned income is going. I know this can save you money because Geoff used it and found enough extra cash in one year to allow him to buy a block of flats.

So for all you people who have the mortgage blues and want to track your spending send a blank email now to moneyfinder@renos.com.au for your free copy.