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BUILDING EQUITY THROUGH MORTGAGE REDUCTION
Equity is what you own in the property. If you have a $500,000 property value and a loan of $200,000, then the equity portion is $300,000. (LVR) Loan to Value Ratio. Most lending institutions require you to have a 10% deposit plus legal expenses to get an approved loan. This is determined by combined income and debt servicing criteria. Surplus income is used against the principal of the loan amount. This reduces the loan, reducing the interest charged and shortening the loan term. |
MONEY MANAGEMENT MORTGAGE REDUCTION PLAN
It is paramount that you use our money management mortgage reduction strategy that encompasses an accurate budget. Debt Consolidation is highly recommended when you pay high interest bearing Personal Loans, Credit Cards and Hire Purchases. You are able to consolidate on a lower interest rate and spread the term of the loan to minimize your weekly, fortnightly or monthly loan repayments. This enables you to maximize surplus income after expenses and liabilities to cut the principal loan amount down quicker. Visit us HERE.
It is paramount that you use our money management mortgage reduction strategy that encompasses an accurate budget. Debt Consolidation is highly recommended when you pay high interest bearing Personal Loans, Credit Cards and Hire Purchases. You are able to consolidate on a lower interest rate and spread the term of the loan to minimize your weekly, fortnightly or monthly loan repayments. This enables you to maximize surplus income after expenses and liabilities to cut the principal loan amount down quicker. Visit us HERE.
RENTAL INCOME FROM FUTURE TECHNOLOGY
Our Clients are using their EQUITY in their Properties to purchase our folding technology. By placing one or two of these removable homes on your section will bring the family back home and will increase your revenue to make life easier in these trying times. Rental income always helps reduce your mortgage quicker.
Our Clients are using their EQUITY in their Properties to purchase our folding technology. By placing one or two of these removable homes on your section will bring the family back home and will increase your revenue to make life easier in these trying times. Rental income always helps reduce your mortgage quicker.
CONSCIOUS COMMUNITIES IN COMMON UNITY
It is on everyone's mind to be part of conscious communities with people like-minded in common unity. Imagine a community in shared accommodation and communal-living resorts. An invested share model can be viewed HERE or HERE.
It is on everyone's mind to be part of conscious communities with people like-minded in common unity. Imagine a community in shared accommodation and communal-living resorts. An invested share model can be viewed HERE or HERE.
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Mortgage & Debt Elimination
The word Mortgage is actually a concatenation of two French words: the word Mort which means "death", and the word Gage which means "pledge". So in effect, a mortgage is a "death-pledge".
The banks will generally structure a home loan for a 25 or 30 year term. This allows them to maximise the interest payments they will receive from you. But it need not be this way.
Reducing the term, and the amount of interest you will pay over the life of your mortgage, is quite a straightforward process. By applying a few basic strategies, one can pay off one's home loan in half the mandated time or less, without making any additional repayments over and above those normally required. How is this possible?
The key principle of Mortgage Reduction is that "Interest is calculated on the daily balance". Therefore, the day-to-day balance of the mortgage account has a significant impact on the interest charged to the loan, and therefore the term of the loan.
There are four basic methods one can employ for Mortgage Reduction. You can use only one of these, or you can use a combination of several of these for maximum benefit. The first two do not require you to pay anymore than your standard repayment, and yet you can halve your loan period. If you don't use either method 1 or 2, then the third requires only a fractionally higher repayment, which you will hardly notice, and yet it will likely shave 6 years and $10's of thousands in interest off your home loan.
The 4 methods are:
The basis behind methods 1 and 2 is to restructure the funding of your property in order to minimise the interest which is charged to your loan.
If you're a little unfamiliar with the account types I mentioned for methods 1 and 2, see the article The Different Types of Home Loans.
Conclusion:
In conclusion, the most important element in all Mortgage Reduction strategies is YOU.
You can derive much benefit by using these methods, but you'll derive maximum benefit if you set targets, write out a plan and budget and monitor it monthly. Be discerning with your expenditure. We suggest using some budgeting software such as the Financial Advisor program as a basic example. This will also allow you to create and calculate your own mortgage amortization schedule (as we have done for Heath & Melissa). Be disciplined - it'll be worth it.
Here are a few additional tips:
The banks will generally structure a home loan for a 25 or 30 year term. This allows them to maximise the interest payments they will receive from you. But it need not be this way.
Reducing the term, and the amount of interest you will pay over the life of your mortgage, is quite a straightforward process. By applying a few basic strategies, one can pay off one's home loan in half the mandated time or less, without making any additional repayments over and above those normally required. How is this possible?
The key principle of Mortgage Reduction is that "Interest is calculated on the daily balance". Therefore, the day-to-day balance of the mortgage account has a significant impact on the interest charged to the loan, and therefore the term of the loan.
There are four basic methods one can employ for Mortgage Reduction. You can use only one of these, or you can use a combination of several of these for maximum benefit. The first two do not require you to pay anymore than your standard repayment, and yet you can halve your loan period. If you don't use either method 1 or 2, then the third requires only a fractionally higher repayment, which you will hardly notice, and yet it will likely shave 6 years and $10's of thousands in interest off your home loan.
The 4 methods are:
- Use a 100% Offset Account
- Use a Home Equity Loan/Line of Credit
- Make Weekly or Fortnightly repayments instead of monthly
- Make extra payments when possible (i.e. tax return cheque / Christmas bonus)
The basis behind methods 1 and 2 is to restructure the funding of your property in order to minimise the interest which is charged to your loan.
If you're a little unfamiliar with the account types I mentioned for methods 1 and 2, see the article The Different Types of Home Loans.
Conclusion:
In conclusion, the most important element in all Mortgage Reduction strategies is YOU.
You can derive much benefit by using these methods, but you'll derive maximum benefit if you set targets, write out a plan and budget and monitor it monthly. Be discerning with your expenditure. We suggest using some budgeting software such as the Financial Advisor program as a basic example. This will also allow you to create and calculate your own mortgage amortization schedule (as we have done for Heath & Melissa). Be disciplined - it'll be worth it.
Here are a few additional tips:
- When restructuring your finances, spend the time to do some research on interest rates and fees across many lenders. Check out the smaller lenders - you may be concerned about their long-term viability, but remember that it's you that will have their money not the other way around!
- Hidden charges, fees and restrictions usually counterbalance lower advertised interest rates: quite often the lowest interest rate is not the best or most efficient loan.
- Speak to your lender about what financial packages they have on offer. By consolidating your banking with one provider, you may be able to get a fee free home loan, offset account, and credit card, as well as discounted home and car insurance. Over a period of years, ploughing the savings you make into your mortgage could make quite a difference.
- If you think you might be moving, consider a "portable" home loan (such as most Home Equity Loans). You will thereby avoid some stamp duty, discharge costs and establishment fees when you move as you will be able to use the same loan.
- If you are self-employed or run a business in your own name and are able to, temporarily park the business cashflow in your Offset account or Home Equity Loan until it is needed. This could reduce your loan interest significantly.
- If you're a professional (teacher, dentist, etc..), look out for "professional" loan packages. You can get a discounted interest rate and bonuses just because the finance providers believe you have stable employment.
- Make sure your finances are structured correctly. Some money spent on good financial advice could well be worth it. For example, if you have investment property in addition to your own home, it's usually best to put the investment property on an "interest only loan" and plough the saved principal repayments into your "principal and interest" home loan. The interest on an investment property is tax deductible whereas the interest on your own home is not. Do all you can to pay off your non-deductible home loan first, and then look at reducing your tax deductible loans. If you're in the top tax bracket, the difference over time can be quite significant.
Tips and tricks for reducing the mortgage
Financial Tips
Want to get your debt under control? Here are tips that don’t take big money, just small changes.
Earning an extra revenue stream
Making money is always fun, but spending it is even better. By joining the GAIN 2U CASH CLUB and the GAIN 2U Network Affiliate Membership Referral Program you are guaranteed to earn an extra revenue stream in addition to your current earnings. By simply sponsoring new membership plans to people within your community can earn you a percentage of each personally introduced membership subscription. This would build you a credit-line and weekly residual rewards to purchase products and services you are already using from our very own product and service trading auction at GAIN Global Trader. You can also get a rebate back for each new GAIN 2U CASH CLUB member who takes out and repays back a grant as a one-time introduction reward. This can be credited to your e-wallet account to be used for grant assistance or to purchase products or services you are in need of. Being part of our organization can certainly reduce your costs if you are an active participator in our affiliate membership referral program.
Track your debt
The first step in taking charge of your debt is to make lists. Like lists of what you owe this month - utility bills, phone charges, rent, car payments, loan payments, and other expenses. Once numbers are on paper instead of in your head, they are a little easier to face. If your list of expenses adds up to more than your take-home pay, you'll need to look for ways to cut those expenses.
Buy second generation
Whether you are talking about clothes, books, cell phones, or cars, you can usually save a bundle when you buy "pre-owned". Now before you scoff at the idea, consider this: second generation isn't what it used to be. These days you can go online and buy great stuff while saving a bundle. Need proof? Just go to Trademe.co.nz or Google.co.nz and search for "used cell phones". You'll be amazed at what you find.
Think local, not global
Many people like to imagine what it would be like to jet set off to their private vacation spot. But big trips can put you in an even bigger financial hole that takes months to recover from. Instead, think about road trips you could take near your home town. Live in Christchurch? Head west into the Hill Country and explore our great land. No matter where you live, there are great get-away spots within a couple hours' drive.
Stick to the small screen
A night for two at the movies can cost you 40 - 80 Dollars. Throw in dinner and you can easily spend 150 Dollars or more for one night of entertainment. Instead, try renting and see how much you save. Better yet, swing by your local library. Many of them carry DVDs that you can rent for nothing more than the cost of a library card. Put the money you save into a savings account - or better yet, use it to pay off loans, credit cards, or other debt.
Review your credit report
Many people have old or incorrect information on their credit reports. You need to know exactly what is on yours to ensure you're not being punished for something someone else did or something that happened a long time ago. So, get a copy of your credit report by contacting one of the three major credit reporting agencies (VedaAdvantage.co.nz, Mycreditfile.co.nz). Review it and get rid of anything that is outdated or just plain wrong.
Give your checking account a checkup
Unless your checking account is already loaded with perks, odds are you can save by shopping around. Some offer free EFTPOS or no ATM fees. Others pay interest for keeping a minimum balance. Analysts say that most customers can put an extra 100 to 200 Dollars in their pockets annually by choosing the right checking account.
Review Mortgages and Insurances
Mortgage and insurance payments make up one of the largest expenses to most people. It pay's to check these with a professional mortgage or insurance broker, to make sure you have the best package for your needs and secondly, update check, you are covered for what you think you are, so your not paying unnecessarily.
Discover savings under your own roof
There are many simple things you can do around your home to reduce your monthly bills. For instance, turn down the temperature on your water heater to lower the gas bill. When doing dishes or laundry, make sure you're only washing full loads so you don't waste water and electricity. Even fixing a leaky faucet will help. Add it all up, and you could see your bills go down 10%, 20%, 30% or even more! You may even find things that you no longer need (idle capacity) which you can sell to reduce debt!
Use Credit Wisely
Credit cards can be a good tool if used properly. But if you rack up a lot of charges, they can become a big financial drain. So make sure you pay more than the minimum to get your balance down. Always pay on time to avoid expensive late fees. And if you are charged too much, start using cash instead. You'll find yourself spending less.
Be Smart When Grocery Shopping
If you're like most people, groceries are one of your biggest expenses. The best way to keep your grocery bill in check is to plan ahead. That means making a list and sticking to it. Impulsive shopping won’t lead to saving money. Also check out coupons and store specials to double or triple your savings. And remember you can score big by buying in bulk, especially on basic items you use a lot like coffee, bread, cereal, etc. Follow these tips and you might save 50 Dollars or more each month.
Savings Around the Holidays
The great thing about holidays is that afterwards, stores need to get rid of all the things they stocked up on. Know any kids who need presents after Halloween? Costumes can go on sale for 75% or more. If you've got a place to store them, pick up next year's Christmas decorations during post Christmas sales. And you can save a bunch on other items (cards, gifts, etc.) during other holiday sales.
Frugal Gift Giving
Instead of spending a lot on gifts for others, try to come up with something more simple and personal (and less expensive). For example, put together a photo album or scrapbook for a loved one. It might take a little more work, but they'll appreciate the effort. And you won't have to spend the next month paying it off.
- The bigger your deposit, the better your chances of negotiating a good deal.
- Negotiate all fees, such as establishment costs.
- Investigate the use of a revolving credit facility. This is when your regular income is credited directly against your mortgage as a form of repayment. However, only a part of your income will eventually be used as a mortgage repayment. As you require the use of the rest of your income for other needs, you can "draw down" on your revolving credit facility.
The benefit is that for a small window of opportunity, the balance of your mortgage is reduced and this, of course, reduces the interest payments. Used correctly, such a facility can potentially reduce interest payments over the term of your mortgage by thousands of dollars. Discuss the details and costs with your bank. - Pay off as much as you can afford. Increasing your repayments from as little as $10 each week can take years off your mortgage.
- Pay off the mortgage as fast as you can. Look at all options to speed up repayments, from making lump sum payments, to using your pay increase to reduce your debt.
- If a bank gives you an extra loan, it's good business for them, but not necessarily good for you. It's relatively easy to get a loan today, so think very carefully about adding to your mortgage, building that sun deck or extra room for example. You can only really start saving for the future once your mortgage is clear. An additional loan, no matter how small, can add years to the life of your mortgage.
- Apart from the interest rate, be aware of other costs, such as application and establishment fees.
- Be aware of the charges that may be incurred for lump sum and early repayments. This applies particularly to fixed interest loans. You may have to save the money in a separate bank account until you can transfer the sum to your mortgage without penalty.
- Begin arranging the loan at the start of the house-buying process. Your ability to negotiate is reduced when you've just found the home of your dreams.
- You don't have to have a mortgage with your own bank. There are many providers so shop around: "care where you invest, but not where you borrow."
Financial Tips
Want to get your debt under control? Here are tips that don’t take big money, just small changes.
Earning an extra revenue stream
Making money is always fun, but spending it is even better. By joining the GAIN 2U CASH CLUB and the GAIN 2U Network Affiliate Membership Referral Program you are guaranteed to earn an extra revenue stream in addition to your current earnings. By simply sponsoring new membership plans to people within your community can earn you a percentage of each personally introduced membership subscription. This would build you a credit-line and weekly residual rewards to purchase products and services you are already using from our very own product and service trading auction at GAIN Global Trader. You can also get a rebate back for each new GAIN 2U CASH CLUB member who takes out and repays back a grant as a one-time introduction reward. This can be credited to your e-wallet account to be used for grant assistance or to purchase products or services you are in need of. Being part of our organization can certainly reduce your costs if you are an active participator in our affiliate membership referral program.
Track your debt
The first step in taking charge of your debt is to make lists. Like lists of what you owe this month - utility bills, phone charges, rent, car payments, loan payments, and other expenses. Once numbers are on paper instead of in your head, they are a little easier to face. If your list of expenses adds up to more than your take-home pay, you'll need to look for ways to cut those expenses.
Buy second generation
Whether you are talking about clothes, books, cell phones, or cars, you can usually save a bundle when you buy "pre-owned". Now before you scoff at the idea, consider this: second generation isn't what it used to be. These days you can go online and buy great stuff while saving a bundle. Need proof? Just go to Trademe.co.nz or Google.co.nz and search for "used cell phones". You'll be amazed at what you find.
Think local, not global
Many people like to imagine what it would be like to jet set off to their private vacation spot. But big trips can put you in an even bigger financial hole that takes months to recover from. Instead, think about road trips you could take near your home town. Live in Christchurch? Head west into the Hill Country and explore our great land. No matter where you live, there are great get-away spots within a couple hours' drive.
Stick to the small screen
A night for two at the movies can cost you 40 - 80 Dollars. Throw in dinner and you can easily spend 150 Dollars or more for one night of entertainment. Instead, try renting and see how much you save. Better yet, swing by your local library. Many of them carry DVDs that you can rent for nothing more than the cost of a library card. Put the money you save into a savings account - or better yet, use it to pay off loans, credit cards, or other debt.
Review your credit report
Many people have old or incorrect information on their credit reports. You need to know exactly what is on yours to ensure you're not being punished for something someone else did or something that happened a long time ago. So, get a copy of your credit report by contacting one of the three major credit reporting agencies (VedaAdvantage.co.nz, Mycreditfile.co.nz). Review it and get rid of anything that is outdated or just plain wrong.
Give your checking account a checkup
Unless your checking account is already loaded with perks, odds are you can save by shopping around. Some offer free EFTPOS or no ATM fees. Others pay interest for keeping a minimum balance. Analysts say that most customers can put an extra 100 to 200 Dollars in their pockets annually by choosing the right checking account.
Review Mortgages and Insurances
Mortgage and insurance payments make up one of the largest expenses to most people. It pay's to check these with a professional mortgage or insurance broker, to make sure you have the best package for your needs and secondly, update check, you are covered for what you think you are, so your not paying unnecessarily.
Discover savings under your own roof
There are many simple things you can do around your home to reduce your monthly bills. For instance, turn down the temperature on your water heater to lower the gas bill. When doing dishes or laundry, make sure you're only washing full loads so you don't waste water and electricity. Even fixing a leaky faucet will help. Add it all up, and you could see your bills go down 10%, 20%, 30% or even more! You may even find things that you no longer need (idle capacity) which you can sell to reduce debt!
Use Credit Wisely
Credit cards can be a good tool if used properly. But if you rack up a lot of charges, they can become a big financial drain. So make sure you pay more than the minimum to get your balance down. Always pay on time to avoid expensive late fees. And if you are charged too much, start using cash instead. You'll find yourself spending less.
Be Smart When Grocery Shopping
If you're like most people, groceries are one of your biggest expenses. The best way to keep your grocery bill in check is to plan ahead. That means making a list and sticking to it. Impulsive shopping won’t lead to saving money. Also check out coupons and store specials to double or triple your savings. And remember you can score big by buying in bulk, especially on basic items you use a lot like coffee, bread, cereal, etc. Follow these tips and you might save 50 Dollars or more each month.
Savings Around the Holidays
The great thing about holidays is that afterwards, stores need to get rid of all the things they stocked up on. Know any kids who need presents after Halloween? Costumes can go on sale for 75% or more. If you've got a place to store them, pick up next year's Christmas decorations during post Christmas sales. And you can save a bunch on other items (cards, gifts, etc.) during other holiday sales.
Frugal Gift Giving
Instead of spending a lot on gifts for others, try to come up with something more simple and personal (and less expensive). For example, put together a photo album or scrapbook for a loved one. It might take a little more work, but they'll appreciate the effort. And you won't have to spend the next month paying it off.