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If the bank says you can borrow 600k then borrow 300k live in a small house/unit, then pay off the loan at the 600k amount. You will pay off house in 7 years. Then upgrade house to a 600k house. At the same rate you will have a 600k house paid in 14 years.
That's a great idea, even better don't sell your old house when you buy the new one. Assuming you can afford it, which should be possible with rent from old house
This. When banks calculates how much the average joe can borrow, they try to predict how much a person can borrow without defaulting on the mortgage, yet at the same time, high enough so that they can't make extra repayments. When their customers can't make extra repayments = more profit to the banks Always borrow less than the amount you're allowed to borrow.
in my time there was no offset account, so we lived on one wage and paying off above and beyond the normal monthly repayment with the other. The interest rate was around 8% at the time, so it was rewarding to pay it off ASAP. My daughter just bought hers and borrowed 490k with monthly repayment of 3k. When I can I will park some money into her offset so to reduce her interest burden.
If you have a friend who has also purchased a house... You can move into each other's house and claim your house as an investment property. This way your interest payments, insurance, rates, repairs, plus depreciation can be claimed as a tax deduction.
Set you loan up as a split loan to debt recycle into the sharemarket 😊 The split loan if set up correctly will allow part of your mortgage to be tax deductible 😁
Great video! Thanks Irene! I’m just curious if there’s a cut-off time for daily interest calculation, for example, the offset amount must be in the offset account until midnight or 5pm to be counted.
Thanks for watching! Most banks use the end of the calendar day, usually at midnight (11:59 PM local time), as the cut-off for calculating daily interest.
The after tax part doesn't matter, because you pay when you sell (aside from dividends but you can avoid those or take advantage of franking) and get a capital gains discount or sell when you retire at a lower income threshold. You can also pay what you would have spent on extra mortgage payments into your concessional or non-concessional super contributions so this avoids CGT too. The expected nominal returns of a diversified ETF portfolio should be more than 6.5% yes, more like 9%.
@@slightfimulator4888 It is too late for me. I have paid off the mortgage long time ago, and cannot do any further non-concessional contributions as well.
Don't borrow to your limit and pick a place you can afford (e.g. can borrow 1mil, borrow 600k instead). Plan to pay double the repayment and you'll be done in 5-10yrs instead of 30. As silly as it sounds, earn more money 😂
Do you have other tips to pay off mortgage faster? 🔎Be a smart Value investor by using Seeking Alpha Premium to get 20% discount with 7-day trial: www.sahg6dtr.com/392M6MZ/R74QP/
If the bank says you can borrow 600k then borrow 300k live in a small house/unit, then pay off the loan at the 600k amount. You will pay off house in 7 years. Then upgrade house to a 600k house. At the same rate you will have a 600k house paid in 14 years.
That's a great idea, even better don't sell your old house when you buy the new one.
Assuming you can afford it, which should be possible with rent from old house
This. When banks calculates how much the average joe can borrow, they try to predict how much a person can borrow without defaulting on the mortgage, yet at the same time, high enough so that they can't make extra repayments.
When their customers can't make extra repayments = more profit to the banks
Always borrow less than the amount you're allowed to borrow.
in my time there was no offset account, so we lived on one wage and paying off above and beyond the normal monthly repayment with the other. The interest rate was around 8% at the time, so it was rewarding to pay it off ASAP. My daughter just bought hers and borrowed 490k with monthly repayment of 3k. When I can I will park some money into her offset so to reduce her interest burden.
If you have a friend who has also purchased a house... You can move into each other's house and claim your house as an investment property. This way your interest payments, insurance, rates, repairs, plus depreciation can be claimed as a tax deduction.
Wont the Tax office question why the Rent is not being collected?
@@smsfsyd You both still collect rent as usual.
You pay $500 a week and your mate pays $500 a week. Even Steven, but "rent" is still going out of your bank into the home owner's account.
@@MrTorcida1976 Nice idea, Just don't have that kind of friend 🤔
Set you loan up as a split loan to debt recycle into the sharemarket 😊
The split loan if set up correctly will allow part of your mortgage to be tax deductible 😁
Great video! Thanks Irene! I’m just curious if there’s a cut-off time for daily interest calculation, for example, the offset amount must be in the offset account until midnight or 5pm to be counted.
Thanks for watching! Most banks use the end of the calendar day, usually at midnight (11:59 PM local time), as the cut-off for calculating daily interest.
@@IreneZhu Thanks very much! I tried to find this info online but couldn’t. You’ve got a new sub 🙂
Hi Irene, great video. Do you have the spreadsheet you used in this video in your downloads?
You can find the downloads here beacons.ai/irenezhu/downloads
@@IreneZhu I looked there but there was no google sheet or excel sheet. Just links to all your affiliates
@@zo_471 It's the 5th from the top under the downloads column called
@@IreneZhu thanks
Can you do a debt recycling or borrow to invest video please 😊
@@lengerer Thanks for the suggestion, will look into it!
Shouldn't you compare the opportunity cost of paying off the mortgage faster vs putting the difference in an ETF portfolio?
can the ETF do better than 6.5% after tax?
The after tax part doesn't matter, because you pay when you sell (aside from dividends but you can avoid those or take advantage of franking) and get a capital gains discount or sell when you retire at a lower income threshold.
You can also pay what you would have spent on extra mortgage payments into your concessional or non-concessional super contributions so this avoids CGT too.
The expected nominal returns of a diversified ETF portfolio should be more than 6.5% yes, more like 9%.
@@slightfimulator4888 It is too late for me. I have paid off the mortgage long time ago, and cannot do any further non-concessional contributions as well.
@@slightfimulator4888 The exact video is being edited at the moment 😃
@@IreneZhu I look forward to it, but I'm asking about this video :p
Don't borrow to your limit and pick a place you can afford (e.g. can borrow 1mil, borrow 600k instead). Plan to pay double the repayment and you'll be done in 5-10yrs instead of 30.
As silly as it sounds, earn more money 😂