Pay off your mortgage quicker using sub-accounts

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Transcription

Announcer: It’s your family’s number one, it’s 96.5, and it is that time on a Wednesday evening where we talk to one of my favourite people. It is Helen Baker, who is our finance expert. Evening, Helen!

Helen: Evening, how are you doing?

Announcer: Good, thank you. Now, this sort of you know, I have just become sort of a homeowner while we’re building but we’re paying the mortgage, so anyway. You’ve got some tips on how to make paying off your mortgage quicker. Is that right?

Helen: Yes. So, basically when people have the mortgage, the interest on that mortgage is generally not tax deductible because it’s your own home and so you want to be able to pay that down as soon as you can so that you’re not paying dead interest on an on-going basis. And then if you can combine that with what we’ve been talking about previously which is trying to put pots of money away so there’s always money there when the bills come. There’s always money there for holidays. There’s always money there for savings. What they’ve brought out now is a way where – you used to be able to just put it all in one offset account and so then you ended up with all those other accounts that weren’t working against your mortgage – but now what they’re allowing you to do is the sub-accounts will actually sit against your mortgage, so your mortgage is actually going to think it’s lower than it is.

Announcer: Oh I like that!

Helen: Which means you’re going to pay less interest. And the benefit of that obviously is that you will pay down your home faster and take years off of what you’d normally pay your home but also making sure that you manage your money well and everything still sticks in its pots in its right place rather than being all in one offset account and you don’t know what’s actually sitting there and whether you are on track with managing bills and money for holidays and so on, so it’s a complete win-win for those who want to try and pay down their home loan as soon as they can.

Announcer: Yeah, so if one wanted to, you know, step out and do that, who would be the best—where would they go, to the bank? The person who owns the mortgage, the mortgage company? How do people go about it?

Helen: Yeah, they could go direct. So they can go to whoever their bank is and talk about how to do that, or if they are using a mortgage broker they can do that, cause that’s their sort of area of expertise just making sure that they marry up the accounts with the appropriate mortgage and have everything structured in the right way. And then reap the benefits from it.

Announcer: Excellent, wow. Now if people want to find out more about this and more about finance and managing money in general, where do they need to go, Helen?

Helen: If they pop on to www.OnYourOwnTwoFeet.com.au.

Announcer: Well you have made a few people happy in Brisbane this evening, Helen. We will catch up with you next week.

Helen: Look forward to it, good luck everyone, bye!