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24 Mortgage Tips and Tricks

7.
Consolidate your debts
One of the best ways of ensuring you continue to pay off your loan quickly is to protect
yourself against interest rate rises. If your home loan rate starts to rise, you can be absolutely
positive about one thing Ï your personal loan rate will rise and so will your credit card rate
and any hire purchase rate you happen to have.
This is not a good thing as the interest rates on your credit cards and personal loans are much
higher than the interest rate on your home loan. Many lenders will allow you to consolidate Ï
refinance Ï all of your debt under the umbrella of your home loan. This means that instead of
paying 15 to 20 percent on your credit card or personal loan, you can transfer these debts to
your home loan and pay it off at 7.07 percent.
As always, any extra repayments or lump sums will benefit you in the long run.
8.
Split your loan
Many borrowers worry about interest rates and whether they will go up but don’t want to be
tied down by a fixed loan. A good compromise is a split loan, or combination loan as they
are often known, which allows you to take part of your loan as fixed and part as variable.
Essentially this allows you to hedge your bets as to whether interest rates are going to rise and
by how much.
If interest rates rise you will have the security of knowing part of your loan is safely fixed and
won’t move. However, if interest rates don’t go up (or if they rise only slightly or slowly) then
you can use the flexibility of the variable portion of your loan and pay that part off more
quickly.
9.
Make your mortgage your key to financial product
Mortgage products known as all-in-one loans or 100 percent offset loans allow you to use
your mortgage as your key financial product. This means you have one account into which
you can pay all of your income and draw from your living expenses by using a credit card,
EFTPOS or a chequebook, as well as making your mortgage repayments.
These types of accounts can make a huge difference to the speed at which you pay off your
loan. Because your whole pay goes into your mortgage account you are reducing the
principal on which interest is charged. Sure, you might take a couple of steps back as you
withdraw living expenses but careful use of this sort of product can get you thousands of
dollars ahead of where you’d be with a “plain vanilla, pay once a month” home loan.
These loans work well when you are able to make additional payments towards the loan. If
you are only able to make the equivalent of the minimum repayment on your loan (and not
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