Q&AMP

The property series

Buying property is a big financial decision so it’s important to ask the right questions and gather as much information as possible. Q&AMP: the property series can help.

Answer

In Australia, we’re passionate about property. And whether you’re buying your first home, looking to invest or maybe downsizing, you’ll find information here about the different ways property can help build wealth.

 

How can I use property to make me better off?

It’s a good question. And there’s more than a single answer. How you may be able to use property will depend on your stage of life, what you want to achieve and the risks you’re willing to take. Because like all investment strategies, property involves some risk.

If you’re starting out and aiming to buy your first home or winding down from work with the goal of improving your retirement lifestyle, you’ll have different aims than a property investor.

If you’re a first-home buyer, finding a place to call your own can be exciting. It’s a time when you can say goodbye to renting and to start building equity and wealth for your future.

Buying your first home can seem like a big commitment—and it can also help make you better off.

If you already own your home, you may have bought your home years ago. You might be at the stage now where you’re thinking about winding down from work and downsizing.

If you already own your home, you may have bought it years ago and you’re thinking about winding down from work and downsizing to a smaller place and drawing on some of the value in your home so you can enjoy retirement.

Downsizing to improve your retirement lifestyle

Downsizing is just one of the ways you can use property to improve your retirement lifestyle. But make sure you think through the trade-offs carefully because once you’ve downsized it may not be possible to go back.

If you’re a property investor, you’re going to have different aims than those of a first homebuyer or someone who wants to downsize.

Invest in property

And there are several ways to invest in property—owning and selling properties is not the only way. It’s just one option.

One investment strategy has the potential to make the most of your property whether you’re a property investor or a home owner.

Debt recycling can help you own your home more quickly and build wealth at the same time. It involves risk though so it’s something you’ll need to look into thoroughly before considering it as a strategy for you.

Debt recycling involves borrowing part of the value you’ve built up in your home to buy investments that have the potential to give you extra income and reduce your tax. The idea is that the extra income is channelled into your home loan so you can repay it faster. And it’s a strategy designed to be repeated—so you’d keep investing and ideally generating more income.

A successful debt recycling strategy can help you repay your home loan faster and build the size or number of investments you hold. It’s one way to build equity and wealth.

Like any strategy involving debt, there are risks. For example if you  were to borrow too much using your property as security—and an investment turns out to be a bad one—you could put your home at risk. So make sure you understand and consider all the risks beforehand.

In Australia, many people can gain benefit from property investment through a property investment trust using their superannuation fund or self-managed super fund.

Wherever you are in life and whatever your goals, if you’re thinking about using property to build wealth remember to consider some important factors:

  • the costs of owning property
  • how you’ll find the right home loan for your needs
  • whether you’ll be unlocking the equity in your home
  • any tax implications
  • the risks involved if you are ever unable to repay your debt, or your investment doesn’t work out the way you expect.

There’s a lot to think about. Q&AMP covers all these topics and more—have a look and discover how your property may help you to build wealth and be better off. Of course before making any decisions, think about your own circumstances and weigh up the options or seek advice to work out the best way for you.

Answer

Finding the right property and making all the arrangements to buy it can take time. It’s a big financial decision so it’s important to look at as many properties as possible and make the right choice. It’s also a good idea to speak with property experts such as real estate agents, bankers and mortgage brokers.

Before buying a home you should:

  • Consider the financial costs involved
  • Find the right lender and home loan
  • Identify where you’d like to buy
  • Find the right house
  • Arrange building inspections
  • Think about how you’ll repay the home loan.

 

Answer

Moving home involves a lot more than just money. You may be more attached to your current home than you realise and the transition can be more emotionally challenging than financially or practically. On the other hand, you may find the prospect of moving once and for all liberating and exciting.

Either way, it’s helpful to make sure you’re mentally prepared for all that moving may involve. Here are three tips that may help make the decision—and your move if you decide to sell—easier:

Assess your needs

  • Decide what you need by considering your daily lifestyle activities and preferences.

Seek advice

A financial adviser can advise you about more than the financial impact of moving home—he or she will be able to help you:

  • develop a clearer picture of your future plans and options
  • make a decision with your end goal in mind
  • work out how much money you’re likely to end up with after selling your home and how it can help you in the long term
  • help ensure you’ll have enough money to meet your retirement goals.

Try before you buy

Search the internet for house sitting or rental options so you can experience the impact of moving away from your current area and possibly seeing less of your friends and family. If you’re staying in the same area you could try reorganising your home as if it were smaller—lock up some rooms and store things you won’t be able to take with you. You may find you’ll miss the space or that you’re ready to live with less.

 

Answer

Did you know that almost one in four Australians aged between 55 and 64 moved home in the previous five years?1

If you’re thinking of selling your home to improve your retirement lifestyle there are many financial, practical and emotional factors to consider first.

You can use this planner to help you decide what’s important to you when considering moving from your current home to a new one.

As you approach retirement you may have substantial equity in your home or may own your house outright.

Home and retirement planner

Thinking about retirement can be both exciting and difficult. Find out what options you have to create a better retirement in three quick steps. 

Get started

Selling your home with the intention of buying another one that is easier to maintain or closer to family might be a good lifestyle choice. And it could also release money for you to invest in shares, term deposits, managed funds, another property or superannuation. This could provide you with more income in the future, giving you different choices in retirement.

But before putting your home on the market use our home and retirement planner and make sure you:

  • understand your reasons for thinking about selling
  • have a clear idea of all of the implications of selling your home—financial and otherwise
  • obtain financial advice
  • explore other options for releasing the equity in your home. For example, could a reverse mortgage be an effective way for you to increase your retirement income? Find out more at the MoneySmart website and consider the benefits and risks of a reverse mortgage before making up your mind.

Notes

1 Australian Housing and Urban Research Institute, Downsizing amongst older Australians 2014.

 

Answer

Once you’re no longer working, the decision to sell your home can be challenging. There are many financial, practical and emotional factors to consider.

You can use this planner to help you decide what’s important to you when considering
moving from your current home to a new one.

If you’re like most Australians aged 65 and over, the most common reasons you’re thinking about moving house may relate to:

  • wanting a smaller home-23% of people want to downsize
  • family reasons-22% sell their homes for family-related reasons
  • lifestyle-20% move for a lifestyle change 
  • other reasons-23% of people move for health and neighbourhood reasons1.

Home and retirement planner

Thinking about retirement can be both exciting and difficult. Find out what options you have to create a better retirement in three quick steps. 

Get started

A financial adviser can help you decide whether selling is the right decision and may also uncover new options you hadn’t considered. Your reasons for selling your home are likely to be influenced by one of five things—or they may be a combination of several.

Financial

You may want to release the value in your home by selling and buying a less expensive place or a home that costs less to maintain. The sale proceeds or reduced expenses might help your retirement income last longer or you could use any left-over money to invest, travel or buy a new car. If your reasons for selling are financial, a financial adviser can help you explore your options.

Use AMP’s home and retirement planner to explore how selling your property could fit into your retirement plans.

Lifestyle

Perhaps you’d like to move closer to family or friends or the places you spend most of your time. You may want to reduce the time spent maintaining your home—cleaning, gardening or repairing—and travel without having to worry about who’ll look after your house while you’re away. Selling may be a good option but you may also find ways to stay there for the long term, and change your house to fit your needs in later life.

Health

Living elsewhere—in a warmer climate for example—may improve your health. You may also need to be close to health care or specialist services.

A fresh start

Downsizing may seem like a good option because your children have moved out or maybe you’ve lost your partner, spouse or a family member. If a personal event has triggered your desire to move make sure you’ve given yourself enough time to adjust before deciding what to do next. It’s never too early to start looking at your options but try to put off a big decision until you’re sure it’s the right one.

A good opportunity

It may seem like the right time to sell your home depending on the property market in your area. You may have even found a house you’d like to buy. Make sure you’re aware of the financial impacts and how the move may affect your social life.

Notes

1. Australian Bureau of Statistics, Australian Social Trends, December 2010

 

Answer

If you’re planning to access the age pension you should seek financial advice before you think about selling your home. To qualify for the age pension everything you own will be assessed under the assets test and all the money you earn—including income from money in the bank—will be assessed under the income test. You can find out more from the Department of Human Services.

The home you live in, and up to two hectares around it (if you own land) are not assessable under the assets test or income test. But if you sell your home, the money you receive from the sale will be assessable under the assets test.

Home and retirement planner

Thinking about retirement can be both exciting and difficult. Find out what options you have to create a better retirement in three quick steps. 

Get started

Put simply, selling your home can affect the government benefits you may receive. The good news is that for up to 12 months the proceeds from the sale of your home will be exempt from the assets test as long as you’re planning to use the money to buy another home.

But be aware that if you put the money in the bank or invest it elsewhere—even while looking for a new home—you will be deemed to be earning income which will be assessable under the income test from day one. Your pension entitlements could be affected, so make sure you seek financial advice and have a plan for managing your lifestyle expenses and income.

And remember that if you buy a cheaper home, the leftover cash will be counted under the assets test.

You can speak with a financial adviser to make sure you’re maximising your government benefits entitlement and taking advantage of any opportunities you may have to:

  • gift money to a family member (within allowable limits)
  • invest in super and save tax.

 

Answer

We all want a comfortable retirement and here we look at how the equity in your home may be able to help improve your retirement lifestyle.

 

For many Australians the investment in the family home is the biggest asset, even bigger than super. You may have worked hard and built-up significant equity or value in your home throughout your working life.

If this sounds like you, it may be worthwhile setting up a financial plan that lets you use the equity in your home to improve your retirement lifestyle. Of course you’ll need to consider the risks involved and a financial adviser can help you do that.

Downsizing your home

The most obvious way to use the equity or value in your home is to sell your home. Downsizing—you could even call it rightsizing—to a less expensive property may provide you with a place that suits you better and leave extra money for you to invest for income. Any extra money may impact your Centrelink benefits so make sure you explore all of the implications first.

You also need to be aware that when considering downsizing, a different house may not actually cost less. A smaller house closer to transport or amenities may cost as much as a larger home further away so you’ll need to do some research before selling.

You may not want to leave your family home. But depending on what you want to do, keeping your home and changing the way you use it can work too.

Renting out part of your home

Renting out part of your home can allow you to stay at home, provide extra income and you might even enjoy the company of a tenant. This could work well if your tenant is a friend or family member.

If you’d like more privacy you might consider investing in your property and converting it to a dual occupancy dwelling.

This may increase the value and equity in your property―as well as providing you with extra income. You’ll need to do your sums to make sure you can get a return on any money you invest. And be aware that any extra income from renting out your property can impact your Centrelink benefits so look into that first

Reverse mortgage

You may want to continue living in the family home and don’t want a tenant. You can still access the equity in your home using a reverse mortgage. It’s generally a last resort option due to the costs involved but it can allow you to access money from your home and continuing living in it.

A reverse mortgage provides a way for you to borrow against the value of your home and then use the money to supplement your retirement. You can choose a lump sum, regular income stream, line of credit or combination of options.

Unlike a normal loan you don’t have to repay a reverse mortgage with regular repayments. The interest on the loan compounds over time and typically—once you sell your home or die—the loan must be repaid in full, including interest and fees.

But a reverse mortgage does have risks—it can impact not only your financial plans but your relationships too so it’s important to do your homework. Let’s look at some of the risks in a little more detail:

  • the interest rates are high; generally higher than average home loans
  • the pace the debt rises can be surprisingly fast—possibly leaving you with less for future needs such as aged care
  • the payments you receive may impact your Centrelink benefits and at the end of the day you may not have many assets remaining to leave those you love.

Of course a reverse mortgage may be the right option for you but it’s important you know all the risks before considering it.

When it comes to planning for the years ahead it’s essential to have a plan that’s designed around your goals and your circumstances.

Our home and retirement planner is a great tool for exploring your own financial position and how your property fits in. Of course getting the right advice is also important so speak with your financial adviser and make the most of the opportunities and years ahead.

Home and retirement planner

Thinking about retirement can be both exciting and difficult. Find out what options you have to create a better retirement in three quick steps. 

Get started

Answer

There are several ways you can use your home to create income:

Dual-occupancy

You may be able to redevelop your existing home into two residences. If you have room you may benefit from living in a smaller part of your home—or rebuild it entirely—and have less maintenance and utilities expenses as a result. You could then rent out or sell part of your home and create a new source of income that may help fund your retirement. Bear in mind that any extra money may impact your Centrelink benefits so make sure you explore the implications first.

Reverse mortgage

If you need extra income and have equity in your home you may be able to stay in your home for the long term. By arranging a reverse mortgage you can borrow money against your home’s equity and access the money as a lump sum or a regular income stream—or a combination of the two.

Unlike a normal loan, you don’t have to make regular repayments on a reverse mortgage but the costs are very high. The interest on the loan accrues and typically—once you die—the property will be sold to pay the amount owing. It’s important to understand the financial implications of a reverse mortgage. For example, what are the costs and what if you outlive your money? There will also be impacts on your estate—especially what you’re able to leave as an inheritance, which may end up being nothing.

Seek advice from a trusted financial adviser first and find out more about reverse mortgages at the MoneySmart website.

Rent out your home

If your home has more room than you need—or maybe it will one day—you can rent it out and aim to buy or rent a smaller property to live in. That way you have the chance to reduce your own living expenses and receive an income at the same time. Be aware that any extra income may affect your Centrelink benefits so make sure you look into the impacts first.

Sell your home

You can improve your cashflow by selling your home; but the downside is your pension entitlement may be affected—the proceeds from the sale of your home can be subject to income and assets tests. The positive side is you may be able to buy or rent a smaller home and lower your living expenses.

 

Answer

There’s no getting away from it. Your home loan can feel like a substantial burden.

So it’s understandable if you want to get on top of your property debt. And it’s possible. Just because you’ve got a 30-year loan doesn’t mean you need to take 30 years to pay it off.

 

 

But can you pay off your mortgage and maintain your lifestyle? The reality is that achieving long-term financial goals like paying off your home loan may involve some degree of sacrifice in the way you live.

But the good news is there are some small things you can do that can make a big difference to your home loan without too much impact on your day-to-day lifestyle. And in some cases, you might even be able to free up extra cash by simply reorganising your finances.

The first step towards paying off your home sooner is to understand your loan—how much you owe, how much you are paying and what other debts you have.

Once you know where you stand you can start getting smarter with your loan.

Consolidate your debt

Over time, it’s easy to build up small debts here and there. Individually, they may not seem a lot but it could mean you’re paying higher interest rates and lots of extra fees, which can keep you in debt longer and really impact your lifestyle. By putting all your debts into one loan you can get a clearer picture of what you owe and potentially save money too.

Make fortnightly repayments

If you can afford it (and you’re not doing it already), consider increasing your home loan repayments from monthly to fortnightly. This small change can make a really big difference to your loan. For example, say you’re making monthly repayments of $1,869 off your $350,000 mortgage with an interest rate of 5.20% per annum. If you continue to make repayments monthly, it will take you 31 years and cost you a total of $705,412. By halving your monthly repayments to fortnightly ones, (effectively meaning an extra payment of $1,869 each year because there are 26 fortnights in a year) you’ll pay your mortgage off five years earlier and save $68,538 in interest.

Of course, by putting more money into your mortgage more often, you may have less to spend on your lifestyle. So you may need to cut back on your daily spending by taking simple measures like bringing lunch to work or cooking at home. But in the long run you stand to save thousands on your mortgage.

Use an offset account

An offset account is a simple tool that can potentially help you save thousands over the lifetime of your home loan.

So how does it work?

An offset account is a day-to-day deposit account typically linked to a variable rate home loan. It allows the amount you have in your offset deposit account to reduce the balance of your home loan for the purpose of calculating interest charges.

Let’s say you keep $2,500 in your offset account. If you have a $325,000 mortgage with an interest rate of 5.20% p.a. you’ll only pay interest on $322,500 thanks to the offset, which means you’ll end up paying off your 30-year home loan five months early and saving $8,632 into the bargain.

As you can see there are some really easy things you can do to get on top of your home loan and pay it off sooner, without a major impact on your lifestyle.

Please note: calculations are illustrative, do not represent actual rates or products and are based on an interest rate of 5.20 % pa.

 

Answer

If you can afford it, making more frequent home loan repayments is a simple way to save interest, pay off your home loan sooner and start to build equity in your home.

Let’s see how this works in practice. Let’s say you’re making monthly repayments of $1,922 on your $350,000 mortgage with an interest rate of 5.20% pa. If you continue to make repayments monthly, it will take you 30 years and cost a total of $691,879. You consult your financial adviser, who advises you to make your repayments fortnightly instead of monthly, effectively meaning an extra payment of $1,922 each year (as there are 26 fortnights in a year). By doing this, you’ll pay your mortgage off 4 years and 10 months earlier and save $64,607.

Changing the frequency of your home loan repayments may not seem like much. But over time it can make a big difference to the amount of interest you pay.

 

Answer

If you can afford it, making extra home loan repayments is a great way to get on top of your home loan, particularly if interest rates are low.

Say your home loan is $250,000 payable over 25 years with an interest rate of 5.20% pa (with minimum monthly repayments of $1,491 to pay off the principal and interest). If you increased your regular repayments by just $100 a month, you could save $26,864 in interest and reduce the length of the loan by 2 years and 11 months.

And if you received a lump sum such as a tax return, bonus or inheritance, you could make a substantial dent in your mortgage. Let’s say you come into $20,000 after a year. If you put it towards your home loan, you could save $59,547 in interest and take 5 years and 7 months off the length of your loan.

Take a look at AMP Bank’s home loan repayments calculator, RapidPay to see how much time and money you could save by paying more off your home loan.

Of course everyone’s situation is different and you need to do what’s right for you.

 

RapidPay calculator

Find out how you could save thousands of dollars in interest and pay off your loan sooner. 

Calculate now

Home loan repayment calculator

See what your minimum fortnightly or monthly loan repayments may be for any borrowed amount.

Calculate now

Answer

An offset account is a simple tool that can help you save thousands of dollars over the life of your home loan.

So how does it work? A home loan offset account is a day-to-day savings account typically linked to a variable rate home loan. It allows the amount you have in savings to reduce the balance of your home loan for the purpose of calculating interest charges.

Let’s look at an example. If you have a $325,000 mortgage with an interest rate of 5.20% p.a. and keep $2,500 in your offset account, you’ll only pay interest on $322,500 of the loan.

The effects will add up over time – you’ll end up paying off your 30-year home loan five months early and saving $8,923 into the bargain.

Loan offset calculator

See how much interest you could save by offsetting your savings against your home loan.

Calculate now

The more you have in your offset account, the more you can save. For example, if you keep a balance of $25,000 in your offset account, that could help you pay off your 30-year mortgage 3 years and 8 months earlier and save you $78,523 in interest.

For some people, an offset account is most effective when they make it the centre of their financial world. Making some simple changes to your day-to-day behaviour can maximise the benefits of an offset account and help you pay off your home loan sooner. Some of the options to consider when using an offset account are:

  • using the account for all your day-to-day banking
  • putting any extra savings into the offset account
  • using your credit card for most of your purchases and then making sure you clear the card once a month to avoid interest. Your money will sit in the offset account for longer, helping to offset mortgage interest.

Please note: calculations are illustrative, do not represent actual rates or products, and are based on an interest rate of 5.20% p.a.

 

Answer

It’s good to shop around and make sure you’re getting a competitive interest rate. All things being equal, the lower your rate the less interest you’ll pay.

But are all things equal? When it comes to interest rates, it’s important to make sure you’re comparing apples with apples. That’s why you should consider ‘comparison rates’, as well as all the other features of your loan.

A comparison rate includes both the interest rate and the fees and charges related to the loan in one percentage figure. This allows you to compare the true costs more easily. Your bank is required to provide a comparison rate when displaying home loan rates.

Home loan repayment calculator

See what your minimum fortnightly or monthly loan repayments may be for any borrowed amount.

Calculate now

Regardless of your current interest rate, the reality is that rates will go up and down over the life of your home loan, so it’s important to consider all the features of your loan to make an informed decision.

If you’re thinking about switching home loans, some of the questions to ask are:

  • Can I open an offset account with the new loan?
  • Am I currently locked into a fixed rate?
  • Can I make extra home loan repayments to pay off my loan sooner?
  • Can I access the equity in my home with a redraw facility that allows me to withdraw any additional repayments I’ve made?
  • What fees will I pay my lender?
  • What costs will apply if I run into difficulties with my repayments?
  • What other costs will I face, such as early exit fees, break cost fees on fixed rate loans or set-up fees on the new loan?

If you switch to a loan with a lower rate, you could find yourself without the flexibility you need. Having goals and a plan is the best way to pay off your home loan sooner.

Answer

When interest rates are low it could be the ideal time to get ahead with your mortgage. Consider options such as:

  • paying more than the minimum loan repayments
  • fixing part of your loan at the lower interest rate so it’s not affected by rate rises—but remember you won’t get the benefit of any rate falls
  • putting some savings aside in assets you can easily access if times get harder.

And even if interest rates fall further, it could be worth maintaining your current level of repayments. With a lower interest rate, you’ll be paying your home loan off quicker.

It’s hard to predict how interest rates will fluctuate over the lifetime of your loan. But you can get ahead by taking advantage of any rate falls and reducing the impact of any increases.

 

Home loan repayment calculator

See what your minimum fortnightly or monthly loan repayments may be for any borrowed amount.

Calculate now

Answer

When interest rates are low it could be the ideal time to get ahead with your mortgage. Consider options such as:

  • paying more than the minimum loan repayments
  • fixing part of your loan at the lower interest rate so it’s not affected by rate rises—but remember you won’t get the benefit of any rate falls
  • putting some savings aside in assets you can easily access if times get harder.

And even if interest rates fall further, it could be worth maintaining your current level of repayments. With a lower interest rate, you’ll be paying your home loan off quicker.

It’s hard to predict how interest rates will fluctuate over the lifetime of your loan. But you can get ahead by taking advantage of any rate falls and reducing the impact of any increases.

 

Answer

Over time, it’s easy to accumulate smaller debts here and there. They may not seem significant. But having multiple smaller debts could mean you pay higher interest rates and multiple sets of fees, all of which can hit your hip pocket.

Consolidating your debts into one loan can give you a clearer picture of what you owe and hopefully save you money too.

Start your debt consolidation process today with three easy steps.

1. Get up to speed with your debts

Start by understanding exactly what you owe and how much it’s costing you.

  • How much do you owe on each debt and what do they all add up to?
  • How much interest are you paying for each debt?
  • How long have you got to pay your debts off?
  • What are the extra fees and charges you’re paying because you have multiple debts?

2. Think about the best way to consolidate your debt

Converting your debts into one loan could help make your debt more manageable. And you’ll potentially save money by moving your debt to a lower interest rate loan and paying just one set of fees.

If you already have a home loan, one approach could be to put your home loan at the centre of your finances by consolidating all your debt and savings into your home loan. This can help reduce your short-term debt burden, because compared to a home loan:

  • Most credit card interest will be charged at higher rates
  • Most personal loans will be charged at higher rates
  • Any money sitting in transaction or savings accounts is likely to be earning lower interest rates than those being charged on your home loan interest rate.

You could take advantage of new lower repayments over a period or maintain the higher repayments and pay off your loan sooner.

But you still need to be disciplined about paying off your debt. If you extend the term of your loan and don’t focus on paying off the principal, you could end up being charged more interest over time.

In this two-minute video, David uses a simple case study to illustrate clearing debt.

Case study: Meet Craig and Samantha

Craig and Samantha are both in their mid-30s, earning good salaries and have been married for four years.

Now they’ve gotten used to living with a home loan, they’re ready to put a big dent in it. Here’s their situation:

  • they have an outstanding home loan of $350,000 (20-year term, 5.95% pa interest rate)
  • they also have combined credit and charge card debts of $12,000 (interest rate 19.55% pa) and a personal loan of $15,000 (5-year term, 14.3% pa interest rate)
  • they currently pay a minimum monthly payment of $240 on their credit and charge cards.

As their situation currently stands, they are making repayments of $3,088 per month across all their loans.

Strategy

Craig and Samantha speak to their financial adviser about how to consolidate all these loans.

They agree to increase the balance of their home loan to $377,000 and use the additional funds to pay off in full their combined credit cards, charge cards and personal loan.

Consolidating their higher interest rate personal loan and credit cards into their lower interest rate home loan means they reduce their total monthly loan repayments by $398.70. If they put those savings into their home loan by keeping total monthly payments at $3,088.78, they will reduce their loan term from 20 years to 15 years and 8 months. This will save them $65,290 in interest and mean they will have paid off their home loan by the time they’re 50, giving them a lot more freedom to build their retirement savings.

Before consolidation

 

Total debt

Interest rate

Payments per month

Home loan

$350,000

 5.95% pa

$2,497.42

Credit & charge cards

$12,000

19.55% pa

$240.00

Personal loan

$15,000

14.30% pa

  $351.36

Total

$377,000

 

$3,088.78

After consolidation

  Total debt

Interest rate

Payments per month

Home loan

$377,000

5.95% pa

$2,690.08

Credit & charge cards

$0.00

0%

$0.00

Personal loan

 $0.00

 0%

$0.00
Total $2,690.08
Savings $398.70

Of course, there are factors that could affect this strategy – such as unexpected changes in interest rates. But you can see that Craig and Samantha’s consolidation strategy would provide a substantial monthly saving – one they could use to eliminate their debt sooner or free up funds for other investments.

Please note: this case study is based on a typical situation to show the benefits of an effective debt consolidation strategy.

 

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It’s important to consider your particular circumstances and read the relevant Product Disclosure Statement or Terms and Conditions before deciding what’s right for you. This information hasn’t taken your circumstances into account.

Information is provided by AMP Life Limited. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you. All information on this website is subject to change without notice.