Browse Forums Home Finance 1 Jun 18, 2009 1:03 pm I found this quite interesting: http://au.pfinance.yahoo.com/b/peter-bo ... -home-loan It goes through the scenario of paying as much as you can as soon as you can and gives you examples of exactly how much money and time you could save by even paying an extra $10-$20 a month. The sooner you pay more off the more you 'save' 'A bottle of wine contains more philosophy than all the books in the world.' Louis Pasteur Vegie garden: viewtopic.php?f=19&t=27637&start=0 My Backyard Adventure Re: How to save thousands on your mortgage 2Jun 25, 2009 3:48 pm Hi lisanne, it's a good demonstration. There are links to interactive extra repayments / lump sum calculators on our web site too (look under "Need Help?" then "Calculators") It shows the savings in term and interest. Re: How to save thousands on your mortgage 3Sep 04, 2009 9:44 pm I'm actually considering living with Redi shades and limited garden to try and do something like this... tooooo many decisions! If I don't buy blinds for a year then they effectively pay for themselves in a way 'A bottle of wine contains more philosophy than all the books in the world.' Louis Pasteur Vegie garden: viewtopic.php?f=19&t=27637&start=0 My Backyard Adventure Re: How to save thousands on your mortgage 4Sep 06, 2009 3:26 am You can always give up things now in exchange for more stuff later. There's a balance in there somewhere where you're getting what you want now, as well as having enough for later. My parents had plain concrete floors for years before tiling them, and actually never finished building some parts of their house. After delaying those bits they realized they didn't actually need them to be happy, so they never got done It's all down to what you want versus what you actually need for happiness. Metricon Riva 33 - http://herlihy-riva.blogspot.com Site start 15/03/2010 - Handover 23/12/2010 9 months and 8 days (284 calendar days) from site start to handover Re: How to save thousands on your mortgage 5Sep 06, 2009 8:29 am We're the proud new parents of a mortgage, at the moment it's only a small one as our land just settled, but we're about to start building. We've already cut back on spending and are making the full mortgage repayments on what the total loan is, rather than just the land amount. The plan is that once the construction is complete and we move, we can continue to make extra repayments by using the money we're paying in rent. If we can live comfortably for the next few months paying both rent and full mortgage we should be fine. That's the plan anyway! We've never had a loan that we haven't paid out early... obviously not on this scale, but we're pretty confident we can do it. ...oh and we're making weekly repayments other than monthly. Re: How to save thousands on your mortgage 6Sep 06, 2009 9:23 am aaron4erin We're the proud new parents of a mortgage, at the moment it's only a small one as our land just settled, but we're about to start building. We've already cut back on spending and are making the full mortgage repayments on what the total loan is, rather than just the land amount. The plan is that once the construction is complete and we move, we can continue to make extra repayments by using the money we're paying in rent. If we can live comfortably for the next few months paying both rent and full mortgage we should be fine. That's the plan anyway! We've never had a loan that we haven't paid out early... obviously not on this scale, but we're pretty confident we can do it. ...oh and we're making weekly repayments other than monthly. Well done for having the determination and willingness to do this. This was how we always worked in previous homes. It's certainly a way to get that debt down to a less stressful high. As for making weekly instead of monthly payments. Making payment more frequently works only if your interest is calculated more frequently than monthly. Re: How to save thousands on your mortgage 7Sep 06, 2009 9:43 am kexkez Well done for having the determination and willingness to do this. This was how we always worked in previous homes. It's certainly a way to get that debt down to a less stressful high. As for making weekly instead of monthly payments. Making payment more frequently works only if your interest is calculated more frequently than monthly. Re: How to save thousands on your mortgage 8Sep 06, 2009 11:06 am Good ideas. We saved lots by continuing to pay the same repayments even when the rates went down so dramatically last year, so we're actually paying double what we need to. We have never missed the money because it was the same all along - and it will help us budget for when we have built and have a larger mortgage cos we'll be used to paying that much anyway. Caz & Co ALL MOVED IN!! Now comes all the hard work-decorating.... [b]Blog: http://cazoraz.blogspot.com/ Settling in Thread: viewtopic.php?f=31&t=36993 Re: How to save thousands on your mortgage 9Sep 06, 2009 12:21 pm aaron4erin kexkez Well done for having the determination and willingness to do this. This was how we always worked in previous homes. It's certainly a way to get that debt down to a less stressful high. As for making weekly instead of monthly payments. Making payment more frequently works only if your interest is calculated more frequently than monthly. Well that's very smart and certainly keeps temptation at bay. Re: How to save thousands on your mortgage 10Sep 06, 2009 5:00 pm kexkez As for making weekly instead of monthly payments. Making payment more frequently works only if your interest is calculated more frequently than monthly. Umm kexkez, there is more to the system than just that. Most monthly payments are based on 30 or 31 days being in the month. If you make fortnitely payments then 2x fortnitely payments equal 28 days leaving an excess of 2-3 days of the month remaining. What this does pan out to tho, is an extra 2 fortnitely payments per year being made that also helps you to get ahead. There is no advantage gained by making weekly payments as compared to fortnitely payments as 7 an 7 equals 14 with no excess, but the advantage gained of weekly payments is well explained by Erin. I hope I've managed to clarify that without sticking my fingers up my own nose. Lol. Cheers Roger P.S. Arron and Erin. Well done on having a great financial system that is gonna work for you bigtime. It's a shame more people dont have the same clarity. It would avoid a lot of mortgageeeee sales. Re: How to save thousands on your mortgage 11Sep 06, 2009 6:48 pm you are right of course shackonthehill. and the big bonus for the clever pair above is that this means the $ are in the mortgage account not sitting in "saving" aka "spending money" account. Paying fortnightly for many others, if they can manage it is certainly a simple way to reduce the loan amount without even being aware you are doing it just by getting in those extra couple of weeks worth of payments. save thousands on your mortgage 12Sep 08, 2009 11:25 am shackonthehill If you make fortnitely payments then 2x fortnitely payments equal 28 days leaving an excess of 2-3 days of the month remaining. What this does pan out to tho, is an extra 2 fortnitely payments per year being made that also helps you to get ahead. This only works if your home loan lender prescribes standard (read traditional) weekly or bi-monthly repayments. That is monthly repayment divided by 4 or 2. However if your lender uses TRUE weekly or TRUE fortnightly repayments then there would not be any gain whatsoever apart from the convenience of timing your repayments to your pay cycle. I hope this clarifies the point. Weekly is the monthly instalment amount divided by four. True weekly is the monthly instalment amount multiplied by 12 and divided by 52. Bi-monthly (aka fortnightly) is the monthly instalment amount divided by two. True fortnightly is the monthly instalment amount multiplied by 12 and divided by 26. Re: How to save thousands on your mortgage 13Sep 08, 2009 8:17 pm Our credit union only deals in fortnightly payments - when you get the loan the minimum fortnightly payment is x. Does this mean we are saving interest compared to borrowing the same amount at same interest rate with a monthly payment? We have always set up weekly payments, same reason as Aaron4erin, DH and I both get paid fortnightly but on opposite weeks so we get a payroll deduction from each of our pays. Re: How to save thousands on your mortgage 14Sep 09, 2009 11:40 pm Helyn Our credit union only deals in fortnightly payments - when you get the loan the minimum fortnightly payment is x. Does this mean we are saving interest compared to borrowing the same amount at same interest rate with a monthly payment? We have always set up weekly payments, same reason as Aaron4erin, DH and I both get paid fortnightly but on opposite weeks so we get a payroll deduction from each of our pays. The only way to find out is to ask your lender what the repayments are if you choose to pay weekly and monthly. Multiply the weekly by 52 and if the amount is the same as multiplying the monthly by 12 then there is no savings, you still pay it off over the contracted term of loan. However, if you find that the total annual amount is more for weekly than monthly, then you would be over paying which will reduce your term. Re: How to save thousands on your mortgage 15Sep 21, 2009 11:38 pm These calculations tend to not factor the time value of money, hence the results look incredible, but in real life, once inflation is taken into account, are not as impressive. Great for current affairs shows trying to look as though they are being helpful. You can bet that the TV stations' bean counters used time value for money in their investment calculations, though! Pfiff Finally making progress again, with a clothesline (yippee) and some much needed little things being attended to over the holidays. 40 C on New Year's eve? We love our a/c! Re: How to save thousands on your mortgage 16Oct 08, 2009 1:59 pm I'm not a big fan of paying off mortgages as quick as possible. It doesn't give you the flexiblity later on. Personally, big fan of I/O only on all loans and using an offset. I wont have to give money to the ATO if I ever decide to use the property as an investment. Re: How to save thousands on your mortgage 17Oct 08, 2009 2:50 pm glenglen I'm not a big fan of paying off mortgages as quick as possible. It doesn't give you the flexiblity later on. Personally, big fan of I/O only on all loans and using an offset. I wont have to give money to the ATO if I ever decide to use the property as an investment. Sorry glenglen, i'm not quite following you? Could you please explain what you mean? viewtopic.php?f=31&t=22766 - my build thread! Time waits for no man. Unless that man is Chuck Norris. Re: How to save thousands on your mortgage 18Oct 08, 2009 9:31 pm glenglen I'm not a big fan of paying off mortgages as quick as possible. It doesn't give you the flexiblity later on. Personally, big fan of I/O only on all loans and using an offset. I wont have to give money to the ATO if I ever decide to use the property as an investment. hi glenglen, care to elaborate on how the interest only loans work in conjunction with offset? i understand the offset part as i have deliberately taken a mortgage amount to match my deposits, but the loan is a traditional principal and interest type, thus the savings is only limited to the tax on the foregone interest i would have earned. do you mean to say, on an I/O loan you can get away with not paying CGT on disposal? Re: How to save thousands on your mortgage 19Oct 08, 2009 9:43 pm nietzche glenglen I'm not a big fan of paying off mortgages as quick as possible. It doesn't give you the flexiblity later on. Personally, big fan of I/O only on all loans and using an offset. I wont have to give money to the ATO if I ever decide to use the property as an investment. hi glenglen, care to elaborate on how the interest only loans work in conjunction with offset? i understand the offset part as i have deliberately taken a mortgage amount to match my deposits, but the loan is a traditional principal and interest type, thus the savings is only limited to the tax on the foregone interest i would have earned. do you mean to say, on an I/O loan you can get away with not paying CGT on disposal? If it is your ppor (principal place of residence) you don't pay CGT. If you rent out your house later you can get a tax deduction on your mortgage, however if you have no (or little) mortgage the rent will be more than the interest and you will pay tax on that. By having the larger mortgage you get tax benefits. Also by having your money in an offset account you can access it when you want, for what you want. When you pay your mortgage off quickly the bank decides if it wants to give you the money back. Re: How to save thousands on your mortgage 20Oct 08, 2009 9:52 pm travelbug nietzche glenglen I'm not a big fan of paying off mortgages as quick as possible. It doesn't give you the flexiblity later on. Personally, big fan of I/O only on all loans and using an offset. I wont have to give money to the ATO if I ever decide to use the property as an investment. hi glenglen, care to elaborate on how the interest only loans work in conjunction with offset? i understand the offset part as i have deliberately taken a mortgage amount to match my deposits, but the loan is a traditional principal and interest type, thus the savings is only limited to the tax on the foregone interest i would have earned. do you mean to say, on an I/O loan you can get away with not paying CGT on disposal? If it is your ppor (principal place of residence) you don't pay CGT. If you rent out your house later you can get a tax deduction on your mortgage, however if you have no (or little) mortgage the rent will be more than the interest and you will pay tax on that. By having the larger mortgage you get tax benefits. Also by having your money in an offset account you can access it when you want, for what you want. When you pay your mortgage off quickly the bank decides if it wants to give you the money back. will there be any tax advantage if i use an interest only loan vs a principal & interest loan? i'm just trying to figure out the difference between these 2. the offset feature is already in place ever since i got slugged by ato... I've just had a look at the website. The company are just building broker's. There are plenty of similar companies that basically draw your plans (they own them so you… 8 10927 Thanks mate. Yeah good points! Leaning towards Option 3 to get a bit extra space in the cabinets but not going too crazy high (and expensive). 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