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Debt Elimination Strategies
This document discusses strategies for paying off a home loan sooner to save on interest costs. It provides examples comparing repayment amounts and interest savings for 20-year versus 30-year loans. It then outlines how making additional weekly repayments of $300 could reduce the loan term by 18 years and save over $262,000 in interest on a $350,000 loan. Continuing those additional repayments for the remaining loan term could grow the savings to over $1 million. The document stresses seeking professional financial advice and provides a fact sheet to help come up with the extra weekly repayment amount.
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Debt Elimination Strategies
- 1. Wize Up toYour Best Financial Decision! www.loanwize.com.au
- 2. How Much do Youreally know about Jon?
- 3. Disclaimer • The followinginformation is of a general nature and does not take into account your individual circumstances. • We recommend obtaining independent financial advice for anyone considering investment. • I am happy to meet you for a discussion on reducing your home loan sooner, and reviewing your existing loan to see if we can save you further.
- 4.
- 5. 20 year vs30 Year loan 20 year loan Interest rate 6.4% Loan Amount $350,000 Repayments $596 pw Total repayments $620,718 Total Interest $270,718 30 year loan Interest rate 6.0% Loan Amount $350,000 Repayments $483 pw Total repayments $754,916 Total Interest $404,916 Savings of $134,198 / Cost $113
- 6. How hard isit?
- 7. Easier than youthink!
- 8. Details • $350,000 over30 years / repayments of $483 pw • Total interest would be $404,906 • Additional $300 per week / reduce interest by $262,788 • Save almost 18 years off the loan. Worth doing for that benefit alone!
- 9. What then? What ifyou continued to save your repayment for the rest of the term? • Continue paying $783 pw (or more) • Remaining 18 years • At say 5% interest rate
- 10.
- 11. You turn theinterest saving of $262,788 into $1,174,392 If you saw Mike, you could probably make it more!
- 12. Here is anotherlook with a different loan amount
- 13. Seek Professional Advice! •You don't talk to a plumber about your curtains do you? • Seek quality advice from specialists, not friends and family!
- 14. Sounds Easy? Where doI come up with an additional $300 pw? Check out the Fact Sheet on your desk.
- 15. Wize Up to yourBest Financial Decision!
Editor's Notes
- #3 Local Born Sunshine Coaster actually attended this school for 10 years. Two boys and gorgeous wife Simone. Addicted to Adrenalin! Love Dirt bikes, Snowboarding, Wakeboarding, and fast cars.... Love the outdoors, camping and getting to the beach with the family (including the dog). Also love helping people. I think I have a lot to offer have a real passion to educate people better.
- #5 You have heard all of the Gearing for investment information before, and it is a tried and proven technique, but in this new age post GFC, more people are looking at reducing their debt sooner rather than taking out more debt. For me I want to help people set goals for their lending and then realise their goals through education and information. Too many people look at the interest rate or repayments when they refinance, and not the total cost of the loan, which often results in too many people paying too much money back to the bank in interest.
- #6 Many people “Chase” the Best rate and regularly refinance their loans onto a cheaper rate every 3 to five years, which is smart to ensure that you have the best deal, but you also need to consider the loan term when doing this too. This example shows that if you refinance a loan with a remaining 20 year loan term onto a 30 year term, and get a cheaper rate (0.4%), you will save $113 per week (mainly due to the longer term) but it will cost you more that $134,000 more in interest if you just pay the minimum. Similar issues arise where car loans and personal loans and credit cards are refinanced onto a home loan. It is great for cash flow, but ultimately will cost you a lot of money longer term. It is critical to ensure that unless you need to reduce your commitments, then try and continue to pay additional repayments regularly to reduce your loan faster, this is the best way to reduce your interest costs and term of your loan.
- #7 It is amazingly easy to pay off your debt early. It is a simple proven formula that can save you thousands over the life of your loan.
- #8 Increasing your minimum repayment will make a massive difference to your total interest costs. Perhaps you cannot afford an additional $300 per week now, but there are always opportunities to increase your repayments such as pay rises, interest rate reductions, bonus payments, and paying off your credit card or personal loans?
- #12 That would be better off in your hands or super than in the banks don’t you think?
- #16 That would be better off in your hands or super than in the banks don’t you think?