by Jye Smith
In these unprecedented times, it’s not all doom and gloom. This is a great opportunity for people to look at how they can improve their personal cash flow, and there’s one item that can have a major impact.
A quick review of your personal expenses such as insurances, utilities, phone/internet plans and general household items is one way of doing this. However, the biggest commitment for most people will more than likely be their home loan, and there has never been a better time to review this.
If you have not reviewed your home loan recently, you are more than likely paying a ‘loyalty tax’ through your current interest rate and the structure of the loan may no longer suit your current situation.
A Recent Example: Saving $324/mth
We have assisted many clients reviewing their home loans recently. One example of this really springs to mind of a couple who built and moved into their new home approximately 2 years ago. They have a young family and wanted to improve their cash flow and borrow some extra funds to finalise the landscaping around their property.
The clients were committed to a fixed rate loan for another 3 years, with a much higher interest rate than is available today. This interest rate was having a flow on affect in their ability to make any additional repayments or add to their savings. It also was not giving them the flexibility to pay back their mortgage earlier.
Following a discussion with the clients, it was easy to see how we could help to improve their cash flow and achieve their goal by doing the following:
- A review of their $20,000 cost to break the fixed rate loan with their current lender
- Understanding the cost to complete their landscaping, which was $20,000
- Looking at how to make additional repayments into their loan to own their home sooner.
Having the ability to workshop the clients’ needs through our 40 lenders to ensure the loan matched the clients’ needs and situation meant we were able to obtain a solution that addressed their goals. This solution was:
- Financing an additional $40,000 to cover off on their fixed rate break cost of $20,000 and the $20,000 cost of landscaping
- Refinancing their existing loan between a fixed and variable facility allowed them to make additional repayments – the fixed rate portion of the loan gave them the added comfort of fixed repayments
- Refinancing at a lower interest rate over all which included the additional funding of $40,000.
The clients are now saving $324 in repayments each month and will continue with their existing repayment. By keeping the payment higher than required under the new home loan they can now reduce the term of their loan, save interest, own their home sooner and achieve their goal of finalising their landscaping.
The team at Lambourne Partners Finance works in collaboration with the firm’s business and wealth advisory teams so we can assist you with all your financial goals and ensure you receive specialist advice. We are uniquely positioned to find you the right loan for your circumstances. Our capacity to combine finance solutions with finance advice makes Lambourne Partners a one-stop shop servicing your accounting, wealth advisory and finance needs.
How We Can Help
Our finance services can assist you with the following:
- Arranging finance pre-approval, giving you the confidence to make your next purchase
- Tailored equipment finance for new assets to grow your business to the next level
- Finding finance solutions for other needs, such as cashflow lending, insurance premiums and business banking
- Loan health checks on your existing finance to assist you in paying your debt back sooner and saving you money.
Lambourne Partners’ Jye Smith thrives on saving people money and creating personal wealth. If your interest rate begins with a 3, or even if it doesn’t, why not get in touch with Jye to see how we can save you time and money.