These days with home loan interest rates on the rise & petrol prices being the highest they have ever been, there is greater pressure to manage our money and the way we handle credit as efficiently and as economically as possible.

We cannot control things like the price of fuel and the cost of living though we can by making a few simple changes to the way we organise our money and the structure of our finance save ourselves thousands of dollars in unnecessary interest payments and reduce the time it takes to own your home by as much half.

Many people think to accomplish these sort of savings is impossible, the idea of paying off all your debts in half the time the bank says it will take seems ridiculous.

This is not the case, by adopting a few simple changes you can

accomplish this feat. I does not require you become a slave to your home loan, it does not mean you will have to learn to be an accountant or a financial wizard. You won’t even have to make any dramatic changes to your lifestyle. All you will need to do change the way you deal with your money.

The strategies I will cover with you are safe, tried and tested. They are not breaking new ground nor will they place you in a position of any risk. They are the way our bank managers have been handling their money and their loans for years.

I call these strategies Rapid Mortgage Reduction and Smart Mortgage Reduction.

In the next few minutes you will learn how to pay off your home in half the time of a regular home loan, save yourself literally tens of thousands of dollars in loan interest repayments and have more control over your money than you ever thought possible.

I will also cover the questions you should ask anyone before allowing them to help you with your money and finish off with information on my Home Loan Guarantee.

Now lets look at the strategies you can use to help pay off your home loan as fast as possible.

Most people work hard to earn their income, pay their day to day living expenses, pay their bills and their mortgage and if they are lucky manage to put a few dollars aside in a savings account.

There is nothing wrong with doing things this way, it’s the way our parents and there parents before them probably managed their money. It is how all lenders want you to manage your money too.

However, consider this. Did you know that on an average mortgage of $300,000 with an interest rate of 7.25% paid off over 30 years using this standard repayment method, the total interest you will pay will be a staggering $436,316.

How can this be? Let me explain, if we look at the repayments on this loan, the monthly repayment is $2,047 dollars, the interest charge on this first repayment is $1,813 so the amount you are actually paying off your loan is $234 or 11.4% of your repayment amount. This ratio changes as you pay off the loan over the next 30 years but the bottom line is that almost 60% of the $736,316 that you pay for this loan is interest charges.

So what can you do about it. Well the simplest way is to pay more than the minimum repayment amount, for instance if you pay as little as $20 per week extra on the loan we just described you will save yourself over $67,000 in total loan interest and shorten the loan term by almost 4 years.

Another way to achieve this result is by switching to weekly or fortnightly repayments, why this make a difference is if we look at fortnightly repayments for instance you make 26 fortnightly repayments a year, that’s the same as paying 13 monthly repayments in a year or an extra monthly repayment per annum. Many people already do this because it also suits their income cycle a little better too.

If you want to save more than the amounts we have spoke of so far you have to do things a little differently. The way you handle your loan has do be done a little more cleverly.

Most of us as we already said work hard and get a regular income either weekly, fortnightly or monthly. What usually happens when we get paid is our wages or our salary gets deposited into a savings account. From the savings account we pay our bills, mortgage repayments, credit cards , personal loans, food, clothing, school fees, entertainment the list seems endless. If we are lucky enough there is a few dollars left over.

Now as we already know interest on our loans is calculated daily, so the more we pay off our loans, the less we pay in interest. Now if instead of putting our income into a savings account and earning a few pennies of interest (which of course is taxable income anyway) instead we put all of our income into our home loan account. What this does is reduce the balance of our home loan by the full amount of our income for as long as that money sits there and because the interest is calculated daily we pay less interest.

The bills of course will still need to be paid but while your money is sitting in your home loan account waiting for the next bill to be paid it is working hard for you by reducing your mortgage interest. And because this is saving you money at the same interest rate as your mortgage it is better interest than your savings account, another bonus is that this saving is also tax free.

Now to be able to do this your mortgage needs to have a redraw facility, this is what it is called when you can withdraw money from your home loan from extra repayments you have made.

To make this strategy work your redraw facility should be free of any lender charges and also have no minimum amount restrictions. If your loan does not have these features you may want to give me a call or leave a message so we can help find you a better home loan, one that will allow you to pay it off as fast as possible.

Now because every situation is a bit different it is difficult to give an exact dollar amount of how much this strategy will save you but using our $300,000 mortgage example of before you should expect to pay off your mortgage at least a year earlier and save over $28,000 in home loan interest. This is what I call Smart Mortgage Reduction. It is our safest and least aggressive mortgage reduction strategy.

Once again if you are interest in finding out what is possible for your particular situation I would like to offer you a Lifestyle audit. We can do this over the phone and it is completely free of charge. Now we realise that this type of phone call can sometimes be a difficult one to make. So let me say right now, we are not here to judge you or embarrass you in anyway, you are important to us and you will be treated with respect. Our aim is to find you a better solution. We’re real people just like you and we know what life can be like.

Now during your lifestyle audit one of Mortgage Power Australia’s people will discuss with you details of what you want most from your money. We look at your lifestyle as a whole not just your financials and we factor in what you want to achieve, we talk about things like your spending, your income and your plans for the future, what you like and dislike about your current loans in fact we cover anything that will help us make sure we find you the most suitable type of loan and the most appropriate strategy for you to pay off your loan as quickly as you can and saving you as much as possible while taking into account all of your lifestyle needs too. It’s about getting the right balance.

Now to getting back to getting the most benefit from the Smart Reduction strategy I have just described we need to find a way to maximise the length of time that your money is sitting on top of your mortgage balance pushing it down like a lead weight and reducing the interest you pay every day.

To do this we have to implement our Rapid Mortgage Reduction strategy, This method is the most effective and most aggressive way to slash years off your mortgage and can save you tens of thousands of dollars in loan interest. A typical result from using the Rapid Reduction strategy is paying off your mortgage 10 to 12 years sooner and using the example above saving over $191,000 in loan interest compared with a regular mortgage.

Now as I have said this is an extremely aggressive strategy and one of the most import parts of this strategy is a budget. I know this can be a hassle but you need to have some idea of what it costs you each month to look after your lifestyle, once you start to measure anything it becomes much easier to control, imagine trying to keep to the speed limit if your car didn’t have a speedometer.  Your budget works the same way, it doesn’t have to be 100% accurate and it should include a little extra room for you to move. After the initial shock that this process sometimes causes your budget will become a very important part of your Rapid Mortgage Reduction strategy.

The next phase in Rapid Mortgage Reduction is having a smart home loan. One that will allow you to redraw extra repayments with little cost and ideally no fees or charges at all. It my also be of benefit to you if your redraw facility has no minimum amount restrictions.

Now as I said earlier the way to maximise the effect of having your income directly deposited into your mortgage account is to have that money sit on top of your loan, reducing the mortgage balance and the interest cost for as long as possible. This type of use of your income is called salary crediting.

To do this we use the banks money to pay for your expenses, we use a credit card. Now at this point many people roll their eyes and think of all the horror stories they may have heard associated with a strategy similar to Rapid Mortgage Reduction. Most of these stories come from people who tried to use this method who had not worked out a budget and did not have anyone to turn to if they needed help. This is where our method is much better and far safer.

Before we help you implement the Rapid Mortgage Reduction Strategy we conduct a complete lifestyle audit and we help you with your budget. Then and only then we help get this type of facility started.

The way the credit card works is conjunction with your smart loan’s redraw facility and the salary crediting of your income is that all (or most of) your expenses can be paid for by the credit card. This allows all of your income to sit on top of your mortgage saving you the maximum amount of interest possible.

Once a month you will receive your credit card statement showing all your spending for that month and rather than pay jut the minimum amount off your card you pay the entire amount of the credit card balance and bring it back to zero by redrawing on your mortgage. By doing this you pay no interest on the credit card at all and at the same time you have managed to leave all of your income working hard for you to minimise your mortgage interest.

The effect of this strategy is astounding and the results are often not fully believed until a few months of using the strategy have gone by, the outcome then speaks for itself.

The other benefit of Rapid Reduction is that the absolute maximum amount of you income remains sitting on your mortgage, there are no money leaks in the system. Every penny you do not use to pay for your lifestyle is kept in the best spot possible your mortgage account.

To get this type of facility in place it is important that all your debts outside of your mortgage are cleaned up. This is usually accomplished by refinancing you home loan and consolidating any other loans into the mortgage account. Your credit cards are also included in this clean up and their balance brought back to zero to put you in a position where you can adopt this strategy.

One other optional service I offer at Mortgage Power Australia to help you with Rapid Mortgage Reduction is what I call My Money Matters, this is where we assign to you a Money Mentor, these people are experts with mortgage reduction and are familiar with your specific Reduction strategy, they hold you accountable to your original Rapid Reduction plan and help keep you on track. They will call you once a month and make sure everything is going according your plan and help fine tune the facility if needs be. They are your training wheels until you are confident you can do it on your own.      

In the case of a Mortgage Broker the best answer to this question is No. The reason being if a broker doesn’t sell their own loans they won’t be tempted to recommend their loan before anyone else’s to get a better commission.

A good broker should have at least 30 to 40 lenders to choose from, both banks and non banks. This will give them 100’s of loans to choose from and help guarantee you get a loan that suits you.

All brokers and mortgage managers get a commission, the answer you want to hear in this case is that the broker gets paid a flat rate commission regardless of which lender they recommend. Once again this is another way to ensure that the loan you get is the best one for you not the person providing the loan. That’s how I do it. 

The answer to this one is obvious Yes, you should be able to get samples of a companies testimonials to read on request. Make sure you do so. They are often the best way to be sure of a company’s integrity.

I spoke about this earlier, a complete Lifestyle Audit should be carried out for you to determine exactly what you require and which loans are best for you based on the findings of the audit. This will ensure you get the most suitable loan possible.  

Your privacy should be of the upmost importance to anyone handling your confidential information, the information should only be used by the company you are dealing with to help you with your loan. You details should not be passed on or used for any other purpose apart from helping provide you with the right home loan.

This is a good question that often sends many a unscrupulous mortgage brokers running. I know that many consumers are sceptical about Mortgage Brokers. Before I got into the business, I was sceptical too.

So in addition to being dedicated to providing consumer education and information free of any obligation (like the article  you have just read), we strive to give the best service available anywhere, to you (our clients), and we do one more very important thing, something that is unique to Mortgage Power Australia in the entire mortgage industry.

We guarantee our work. That's right. We fully guarantee every loan refinance and every mortgage reduction strategy we do. If in 12 months your not 100% satisfied that your new loan structure is not saving you more money than your previous loan setup, we will refund 100% of the new lenders loan establishment fee. Guaranteed. Up to $1,000.00 money back, what could be fairer.

As a matter of fact, add this question to the list. Question #8 is "Do you guarantee your work?" Not many companies do, guarantees are only given by organisations who are confident enough that they can do what they have promised, and do it to the letter. We believe it's important that you have this information before making your decision.