There are three mistakes we commonly see that you are likely making with your mortgage, causing you to pay thousands of dollars more than you need to and ultimately slowing down your progress.
Fixing your entire mortgage
If you fix your entire mortgage and you make the minimum repayments over 25 to 30 years, you will have paid more money in interest than the initial mortgage itself.
Let's use an example below:
Mortgage amount = $600,000
Average interest rate = 6%
Mortgage term = 30-years
After 30-years you will have paid a total of $1,294,408 back to the bank. This means you have paid $694,508 in interest repayments alone, which is more than the actual mortgage itself!
Not utilising offset/ revolving credit facilities
Offset and Revolving Credit facilities are specialized home loan accounts that, if used correctly, enable you to reduce the amount of interest you pay to the bank and thereby paying down your principal faster.
If you require further information regarding offset/ revolving credit facilities - you can get in touch with us.
Keeping all your properties under one bank
This gives the bank control over your portfolio which isn't great because:
Allows the bank to dip into your other properties if you are struggling to pay the loan on one of your properties.
Allows the bank to clip sales proceeds if you sell one of your houses and the bank isn't happy with the remaining equity or your servicing capabilities over the rest of your portfolio.
It's also inefficient when it comes to maximising 'usable equity' to purchase more properties.
Disclaimer
The contents of this article is for information-only and may express the opinion of the writer. This article is not be taken as personalised financial advice, as everyone’s situation is different. Please always seek advice from a financial adviser before making any decisions with your personal and/or business finances.
