Category Archives: Mortgage

Cutting home loan on white background

‘The Fast and Furious’ version of paying off your mortgage

We wish we could say there was a magic formula or easy way to pay your loan off fast. But we can’t (well, we could but that would be a lie and we don’t roll that way!). It simply takes time and hard work. However, we can offer you some numbers that may put a smile on your dial. The following example scenarios illustrate how you can still save hundreds of thousands of dollars in interest if you make a sound financial plan and commit to it.

The working example

Let’s assume you have the following:

  • loan amount: $500,000
  • monthly repayments: $2,400pm
  • 30 year loan term
  • interest paid over life of loan: $360K

Now take a look at each scenario below to see how the numbers stack up.

Scenario 1 – making extra repayments

  • loan amount: $500,000
  • increase your monthly repayments to $3,000pm
  • pay off loan in 20 years (not 30)
  • interest paid over life of loan: $225K
  • save around $135K in interest & pay off loan 10 years earlier

Scenario 2 – increase repayments according to CPI increase (3% PA repayment increase)

  • loan amount: $500,000
  • monthly repayments: $2,400pm
  • year 1 – pay $2,470pm; year 2 – pay $2,550pm; year 3 pay $2,620pm etc
  • pay off loan in under 20 years
  • interest paid over life of the loan: around $250K
  • save around $110K in interest & pay off loan 10 years earlier

Scenario 3 – combine scenario 1 & 2

  • loan amount $500,000
  • increase your monthly repayments to $3,000pm + add in CP increases each year
  • pay off loan in 15 years
  • interest paid over the life of the loan: around $185K
  • save around $175K in interest & pay off loan 15 years earlier

What this all means for you

Scenarios 2 and 3 are effectively a nifty forced saving plan. By choosing either of these options, the principle amount you pay off results in huge savings to your hip pocket. You reduce the loan term by 10-15 years thereby saving all that interest. Imagine what you could do with all the extra cash?

These scenarios are just one of the great tools in our investment arsenal that we can help you employ to keep your repayments on track. Connect with us as we’d love to share them.

fix interest rate

Is it time to fix your interest rate?

There are a few different reasons to fix your mortgage rate but in our opinion, not all of them are valid. Let’s see if you can pick the right one:

Should I fix my rate to:

  1. Beat the bank and interest rate market?
  2. Save money?
  3. Manage risk?

If you answered C, you’re a winner!

To understand why, think about this. What would your budget look like if rates were to rise by 0.5%, 1% or even 2%? If that thought gets your heart racing a little bit, then it just might be a good idea to think about fixing.

At Professional Partners, we offer a complete interest rate sensitivity analysis service for our clients to help them see the impact of a rate rise on their budget. With rates more likely to go up – rather than down – in the next few years, it might be a good time to contact us to take advantage of this service and give your budget a good ol’ tune-up.

Budgeting 101 For New Parents

Having a baby brings much anticipation and joy. But it can also be stressful too as you start to think about juggling your mortgage with all the new expenses a family can bring – not to mention a reduction in income when your partner goes on maternity leave. There are, however, a number of ways to manage this and keep your finances on track.

Top tips to managing your budget when you start a family

  1. Plan ahead – make sure you understand your employer’s maternity leave policy and what you are entitled to in terms of government benefits.
  1. Watch your savings – if you have savings, ensure you adequately manage them by adding to your account wherever you can, rather than ‘dipping in’. If you have to dip in then pay yourself a set amount via a direct transfer each month. This way, you won’t be tempted to pull out more and more on an ad hoc basis which can quickly eat into your savings nest egg.
  1. Keep a tight rein on debt – avoid running up credit cards and personal loan debts. Use the direct transfer method to keep it under control.
  1. See if you qualify – your bank may offer a ‘repayment holiday’ for up to 12 months if you’ve had your mortgage with them for some time or have extenuating circumstances. Contact them to see if you’re eligible.

These are just some of the ways you can manage your mortgage repayments as you welcome a new family member. For more, speak to one of our mortgage brokers here at Professional Partners. We can offer you lots of great advice from helping you forecast your budget to innovative tools to assist with repayments.


Is it better to buy first then sell?

You’re ready to upgrade to a new home but you’ve hit a substantial brick wall. What do you do first – buy your new property or sell your current home? There are many variables and scenarios to consider in this situation but overall, our opinion is you go for the ‘buy first and then sell’ option. Here’s why:

The rationale
Finding a new house is no easy task. When upgrading it can take months, or even up to a year, to find a suitable property. If you sell first, you may find out yourself out in the cold – literally! – for a long period as you hunt for the right property.

Price is another consideration too. The higher up the property market you go (i.e. the more expensive the property) the less supply available. Limited supply means a higher demand for these properties so often the one you have your eye on sells for a much heftier price than expected. If you sell first and end up underestimating the purchase price upgrade, how will you cover the shortfall? And where will you live in the meantime?

Only take this option if ….
Our recommendation therefore is to always buy first and then sell. But this all depends one big factor – are you a strong enough financial position to afford this option without putting an added burden on your situation? To work this out, you need to understand your cash flow and bridging options but most importantly, seek bank approval. Will they allow you to buy first without a sale contract on your existing property?

An extra tip: when doing your sums be conservative in the expected sale price of your current property. You don’t want to end up with a shortfall due to lower-than-budgeted-for sale price.

We’re here to help
Still unsure about the ‘ins and outs’ of whether to buy first and then sell? Connect with us today so one of our experienced brokers can run you through the options to help you make your decision.