Three ways to get more from your mortgage
When you’re juggling the costs of raising a family while saving for the future, it can be hard to imagine ever actually owning your home outright.
But that’s just what Macquarie Bank’s offset home loan package could offer. A smarter way to home ownership – without sacrificing the holidays or fun weekends that make up a lifetime of family memories.
“Young families often have a single or reduced income, just when expenses are at their highest,” explains Katrina Anderson of Sydney-based mortgage broker Sage Loan Services.
“For some of our clients, reduced disposable income is a real challenge, it feels like they are only just keeping their head above water. Then fear creeps in, because they also want to set aside enough for the kids’ education – or having another baby.”
The tension between paying for today’s expenses without ignoring tomorrow’s needs is undeniably stressful.
1. Protect your family's lifestyle today
The important first step is to make sure you’re paying the most competitive rate possible. With interest rates at an all-time low, there is no excuse for not shopping around.
Plus, if you’ve built up some equity in your home loan over the past few years, your loan to value ratio may have improved. This is the amount of your loan, as a percentage against the value of your property, and as it goes down your chance of a better rate goes up.
This is just simple math. Check the loan calculator to see how much you could save over the term of your loan with a slightly lower rate – and you’ll see how much difference it could make to your family’s cash flow.
2. Pay off your home loan sooner
Rather than pocket (and spend) what you save on repayments, put it straight into your offset account. If you keep paying this as well as your old repayment amount, you’ll pay your home loan off sooner – and save even more on interest over the life of the loan.
That’s if interest rates don’t change of course. But if (or when) they do, you’ll also have a buffer to ease the pain.
3. Add more offsets to control your budget
This is an important part of your strategy.
If you really do want to pay your home loan off sooner (and pay less interest), you shouldn’t just dip into that offset if you feel like booking a holiday, doing up the bathroom or paying off the credit card after a blow-out family Christmas. This can be very tempting when you can see those savings there, and they’re at call. But you need to set it, and then forget it’s there.
Macquarie offers multiple home loan offset accounts that all work together to reduce your home loan interest. You create up to 10 different offset accounts: set up one for holidays, one for Christmas gifts, one for renovations and one for future school fees.
“This way you still get the benefit of all your savings reducing the interest on your home loan, but also have the peace of mind you’re setting aside enough for future needs,” says Anderson.
“Plus, Macquarie’s banking app makes it easy. It gives you a quick snapshot of all your accounts, categorises your debit card expenses for you, and helps you stay on top of your finances.”
For example, you can use your debit MasterCard on your ‘short-term’ offset account to make it easier to track and manage your spending – rather than worrying about moving money around.
That means you can have a home loan and still have a family holiday. And also own that family home outright a little sooner.
