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SEQLD Mortgage Reduction Page

Mortgage Reduction using our expert investment property advice...

...can save you money and years off your mortgage!

In my discussions with the many professional money people that I have spoken to over the years, I have discovered that the majority of the people they talk with, have a common interest.”How do I pay my home loan off sooner?“

The best possible way to achieve this and in the shortest possible time is to use all the financial tools we now have available today through the purchase of an investment property .

The first place to start is to get the right loan product for our home loan which allows us to pay off as much principal as quickly as we like and without penalty. As we all know we have no tax benefits associated with the interest paid on personal debt. So wouldn’t it be nice to find a way to get rid of this debt as quickly as possible. This will save us massive amounts of dead money paid in interest and quickly create equity in the home property for further investment if so desired

The second step is to set the investment property loan product in conjunction with our home loan. What this will enable us to do is capitalise the interest on to the investment property portion of the loan facility and allow all the income to go to reducing the principal amount of the home loan portion.

Let me explain.

(1). When setting up an income producing investment we have tax benefits provided to us from Mr Rudd. All costs associate with an income producing investment are entitled to tax deductions at our highest marginal tax rate. These benefits include any cost that is not a government charge, and include any loan setup costs, interest charges on the loan, depreciation on the fixtures, fittings and building, insurance and management fees etc.

All these tax benefits can be sourced through a form called a 15/15 tax variation schedule and allows our annual tax assessable income to be reduced by the amount of the tax benefits and thus reduces the tax we will pay each pay day, therefore adding sometimes hundreds of dollars to our pay depending on the amount of the benefits. This extra money should be applied to reducing the home loan.

(2). Rental income from the property. Also applies to the home loan.

(3). Don’t forget about the regular income. If we have all our pay deposited to our home loan account and set up a credit card with a direct debit to be paid before the interest free period expires, we will also benefit by paying interest only on the reduced amount until the card is paid, as the loan work by charging interest on daily balances. So the more days in the month we can reduce the principal amount the less interest we will pay.

If we follow this investment property strategy you won’t believe how quickly we can pay out our home loan. Getting the right loan product is of the utmost importance and we should consult with a lending professional to ensure that we get the best product at the best rates. At the time of writing information re tax benefits is correct.

The addition of an investment property can have a dramatic effect on the time that it takes to pay out your home mortgage. With an extra $1800 or more ( tax breaks and rental income ), on top of your salary offsetting your mortgage each month disciplined budgeting is not quite as critical.

Using your investment property as a mortgage reduction tool is a simple process once set up correctly by a finance specialist.

Our referred finance specialists will take the time to explain to you how a mortgage reduction system works so you can make an informed decision as to whether it will benefit you.

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.

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".

Mortgage Reduction

Contact Us on 1300 798 011 or send us an email below.






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The following table illustrates the amount of Income Tax you will pay by retirement*

A tax effective property investment can be partially funded with income tax
which would normally go straight to the Australian Taxation Office (ATO)

Taxable Income
10 Years
20 Years
30 Years
$25,000
$28,500
$57,000
$85,500
$35,000
$45,000
$90,000
$135,000
$45,000
$75,000
$150,000
$225,000
$55,000
$105,000
$210,000
$315,000
$65,000
$135,000
$270,000
$405,000
$75,000
$165,000
$330,000
$495,000
$150,000
$460,000
$920,000
$1,380,000

*The above taxation figures can legitimately be used to help finance an investment property to pay for your retirement. (Inflation Rate 3% and Tax Scales post July 2008/9. Includes Medicare Levy at 1.5%)

It has also enabled us to reduce our home loan by $23,000 over this past seven months.... ~ Warren & Debbie Eggleston

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