The mortgage is the cornerstone of financial tremors and conversation amongst the majority of Australian’s looking to shore up their financial position. While the build-up and establishment is important, it is the management, review and on-going consideration to your mortgage that makes or breaks your long term financial freedom.
For many it is a simple and focused approach, “pay down the mortgage as fast as possible”, with many managing to do so much faster than the bank would prefer! But what other opportunities are forgone by this narrowed mindset? Could a further investment into other property have been more beneficial? Should the consideration for diversification into an alternative investment such as a share portfolio be in mind? The opportunities are plentiful, but often not easily decided upon.
Everyone’s situation is a little different, and, making sure all parties are comfortable with the navigation of the mortgage and repayment is essential. This is key to why we continually look to speak with and review our clients throughout their journey and keep in check their levels of comfortableness throughout. While debt is something that we have grown up to fear, it is not something that needs to constrict us. Debt, effectively used, is a tool for advancement and progression to access opportunities we do not yet have ability to access alone.
While your property can clearly put a roof over your head and keep you warm at night, it can also be a tool for leveraging and creating further layers of passive income. Generally, the home is the largest asset in a family’s financial rundown. The home ownership dream is not something we need to sacrifice to build and grow our pools of wealth and investable assets, it is all about moderation and balance. We can feasibly reduce debt while simultaneously growing our wealth.
Along the mortgage cycle, we need to be pulling the levers of control we do have to ensure that our rates and structure of loans are appropriate. This may include having portions of fixed and variable loans or asking the bank and other providers what they can do to improve your interest rate. The use of offset and redraw accounts can also save high levels of interest and years of repayment or provide other opportunities also.
While it isn’t always an enjoyable conversation to have, the benefits of assessing all options and making considered and informed decisions can place you in an overall, far more advantageous position than the ‘set and forget’ mortgage model.
This blog contains information that is general in nature. It does not take into account the objectives,
financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. If you decide to purchase or vary a financial product, your financial adviser, AMP and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investment. Please contact us if you want more information.