Mortgage Reduction Strategies

• Our 4 Step Mortgage Reduction Plan
• Other Mortgage Reduction Strategies
• FAQ about Mortgage Reduction Strategies

Our 4 Step Mortgage Reduction Plan

The 4 Step Mortgage Reduction Plan is a unique offering from Aspley Jandera. It is only possible because we combine 20 years experience and professional qualifications in Financial Planning, Mortgage Broking, Investing and Accounting.

Using the Aspley Jandera 4 Step Mortgage Plan you'll not only pay your mortgage off sooner you will also own a substantial investment portfolio in addition to your home. For example:

The mortgage: $400 000 @ 8.5% over 30 years

It starts with the careful selection of your mortgage. Low interest rates are only part of the equation. You need an excellent redraw facility with no additional fees and early payment options. Only Aspley Jandera knows how to select the right mortgage for you.

Next make additional payments. Even a relatively small amount like $100 per month makes a substantial difference. Aspley Jandera will plan your cashflow to ensure you're not over-extended.

When your home equity builds we activate the redraw facility. Don't waste this opportunity by spending the redrawn money on big televisions, holidays or new furniture. Instead Aspley Jandera investors put this money into conservative investment stocks to generate a tax-deferred income stream.

That income is then used to pay down the mortgage even quicker. Only Aspley Jandera are qualified and accredited to select and trade in the appropriate stocks.

When you mortgage is paid off, you not only own your home you also own a blue chip investment portfolio. This is achieved with no additional effort from you.

Use our online calculator to determine the results Aspley Jandera can achieve for you.

Then call Aspley Jandera today on 1300 79 10 69 to book an initial consultation or book online. We will analyse your situation and provide a written strategy on how you can implement the Aspley Jandera 4 Step Mortgage Plan to your advantage.

Contact Us for a free mortgage health check

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Common Other Strategies you can't go past:

1. Make more regular repayments (fortnightly over monthly)

Without doing anything except changing from a monthly to a fortnightly or weekly payment cycle you could save a significant amount of interest over the life of your loan.

Consider:A saving of $26,000 may be achieved by simply changing from a monthly to a fortnightly repayment cycle on a $400,000 loan. You may also repay your mortgage about a year sooner.

2. Review your personal budget to see where you may be able to cut back

Review your personal budget (use our budget spreadsheet to assist you) to see what you're spending your money on. Review your monthly expenses and try and determine which of these may be reduced or eliminated altogether. The savings achieved by cutting back our expenses may be added to your mortgage repayments.

Consider: A saving of about $50,000 may be achieved where you make an extra repayment of $10 a week for a loan of $400,000. You may lose 1.5 years off your mortgage term.

3. Make regular extra repayments

Making additional repayments can offset mortgage interest costs as they offset the interest calculation, which in many loans is done daily. You will see from the above example that an extra repayment of only $10 a week can lead to an $80,000 saving.

Consider:A saving of over $117,000 may be achieved where you make an extra repayment of $20 a week for a loan of $400,000 and have a fortnightly or weekly repayment cycle. Your may own your home 4 years sooner.

4. Make lump sum repayments

Should you come into a lump sum or accumulate savings in any way, you may want to consider putting this lump sum into your mortgage. This amount will sit in your account offsetting interest as it is calculated. Such a repayment will have a greater benefit if made earlier in your repayment rather than toward the end. In any event, any lump sum repayment will always result in sum level of interest saving.

Consider:A saving of over $175,000 may be achieved where a $20,000 lump sum contribution is made at the end of the first repayment year and take about 5 years off your repayment term. This saving would reduce to about $48,000 if made in the 15th repayment year and take almost 2 years off your repayment term.

5. Direct credit salary, live on your credit card and sweep the monthly repayments

Many mortgages today allow you to direct credit your salary. Rather than having your salary paid to a personal bank account and living off drawings from this account, you may consider direct crediting your salary to your mortgage account and placing your living expenses on a credit card attached to this mortgage. Ensuring that you continue to living within your means the credit card will sweep your account and clear your living expenses each month before interest is charged. This will result in a higher interest saving over the days your salary is in your mortgage account. Once the sweep occurs your mortgage account will again increase however your monthly savings will automatically remain in this account, continuing to offset your interest costs.

6. Direct salary increases to the repayment of your mortgage

Many individuals see their income increase each year or may benefit from a higher salary by changing jobs. Whilst there will inevitably be increases in the cost of living, you may find that whilst your income has increased your additional personal expenses have not. In this situation you may consider directing these additional funds into your mortgage. Where you have done a budget you may even be able to direct your employer to split your salary payments or where this is not possible set up a monthly direct debit which removes these funds from your account before you see them.

Consider: An increase in salary of $200 a month, which is not used could lead to a saving of over $180,000 for a $400,000 over 30 years.

7. Consolidate your personal and credit loans

Many people have credit card loans and other personal loans used to purchase cars, furniture or pay for an overseas holiday. These loans are generally at interest rates higher than your mortgage interest rate and are over much shorter terms. You may consider consolidating these other mortgages into your home loan to benefit from the lower interest rate and longer repayment term. To further increase the benefit of this strategy you should continue making the same level of repayments you would have made to these other loans but instead direct it to your mortgage. This will lead to further interest savings.

8. Regularly review your mortgage product and switch to save

You should review your mortgage at least annual and particularly after a significant set of interest rate rises or falls. This is to ensure that your interest rate remains the most competitive in the range of products that provide you with the features and functionality you need from your mortgage. Ideally, this should be done at the very outset when you first apply for a loan, however over time some mortgage products become less competitive or do not provide the features and flexibility you may require as your financial situation changes. Also, where you originally applied for a fixed rate loan, at the end of the fixed rate period, your reverting interest rate may not be the most competitive or your mortgage provider may not have the most competitive fixed rate loans to roll into for another term. In these situations it may be prudent, subject to any exit expenses to move your mortgage to another provider.

9. Consider upfront mortgage fees and charges over ongoing monthly costs

When taking out a mortgage you should consider those mortgage products which have upfront fees and charges over those which have a zero application fee. In general, most mortgage products with a zero application cost will have monthly fees which will more than make up for any upfront fee or charge.

Consider: An up-front application fee of $600 may be recouped over 5 years where no further monthly fees are payable when compared to another loan with no up-front application fee but a $10 monthly fee. This saving may be even better where your mortgage broker agree to rebate the initial application fee.
Note: Savings based on an initial mortgage of $400,000, with an interest rate of 8.67%, paid over a 30 year term

Sophisticated mortgage reduction strategies

Those mortgage reduction strategies listed above can be found in any mortgage magazine and explained by any mortgage broker. For many, the savings attributed to the above strategies will be as far as they will ever go in reducing their mortgage and saving on interest and time.

There are a number of other mortgage reduction strategies which vary in their level of sophistication which most mortgage brokers are simply unaware of or are not qualified in discussing. These strategies can lead to greater savings in interest and time than offered by those strategies above. It is important however that individuals with a mortgage consider the basic mortgage reduction strategies before moving on to more sophisticated strategies, however, if you are not aware of these additional strategies then you will have no way of planning for their implementation.

One such strategy offered on this site is our mortgage reduction strategy which builds on the additional repayment strategy and takes this to the next level. Clients interested in seriously considering their additional mortgage reductions options should ensure they have a solid understanding the following:

1. Their personal financial budget;
2. Their ability to make additional repayments; and
3. Their desire to repay their mortgage sooner.

If you have a desire to reduce your mortgage, work with and develop a long term relationship with a professional adviser, click here to find out more about our sophisticated mortgage reduction strategy.

On a $400,000 mortgage, our mortgage reduction strategy has the potential to reduce your repayment time frame by almost 6 years and provide you with a financial benefit of over $200,000, by simply having the ability to make an additional $200 a month in repayments.
There are other sophisticated mortgage reduction strategies which can be developed and these would include the use of:

1. Other property investments;
2. Other investments including direct shares and managed funds; and
3. Superannuation.

To allow us to develop an appropriate mortgage reduction strategy call to arrange for an initial appointment.

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Your Mortgage Reduction Questions Answered