Want a big change? Great news! 2021 is the year to take control of your finances. Here’s why - with record low-interest rates, greater competition between lenders and more home loan products with huge and tempting offerings, you can’t just let that slip past so you can set a better future ahead.
Here are some tips you can do to take advantage of the current financial trend.
Know where you are in terms of your finances
Before you do anything, know your financial situation first and how you are handling your current finances. How much money are you earning and how much of it goes to your debts and other expenses? How much is left - do you save or just go by the paycheck? These things matter a lot.
Checklist your debts and loans - go with those that are high in interests first. These are what drains your pocket each time every month. Is there something you can do about it or make it better? Yes. Look at how much is the current interest rates - find out exactly what you owe on your home or car loan and how this compares to the overall value of your property/car.
This could help with reducing your debt repayments. Many lenders now offer lower interest rates to borrowers with a low loan-to-value ratio or LVR (generally under 60%). Just calculate the LVR by dividing your loan balance by the value of your property/car.
Consolidate Credit Card Debts - if you have more than 1
We know that credit cards come with higher interest rates more than anything. That’s because personal loans come with much higher interest rates than home loans.
If you have more than 1 credit card, you are actually paying off double high-interest rates and fees. If you can get an offer of consolidating them and just paying off a single debt - you then only pay a single high-interest rate.
Get a home loan now - if you still don’t have one
As the official cash rate is now lower than before, the mortgage market has become more competitive as well. Take advantage of the new non-traditional and online lenders' low introductory rates to new borrowers - not to mention major banks have also reduced their rates.
So expect to get a fixed-rate home loan with interest rates as low as 2%. Comparing all the deals available in the market now - you can also consider variable-rate home loans, in case you are paying more than what’s being offered now - best to call your bank to match it or if they refuse, you can then refinance it for a better rate long-term.
After all, the difference between an interest rate of 4% and an interest rate of 2.5% on a 25-year mortgage for $600,000 is an impressive $475 a month or $5,700 a year. Think about how much you could’ve saved!
It’s time to invest in other assets
Not all debt is bad. There are debts that would give you cash flow, not just expenses. All businesses shell out money and owe money to start something big.
With a cash flow investment built at a time like this, you get the best deals in the market in terms of loans and rates.
If you are looking into property investments - property prices are positive, requiring very little money for equity and lower interest rates. This is the best time to grow that property portfolio you’ve been dreaming about.
Investment properties most of the time pay for itself when managed properly. If you don’t want to buy, you can get a lease option and spend very little on development so you can have it as a rent to rent accommodation for a certain number of years - without you buying or paying for a mortgage.
As with any investment decision, this approach isn’t risk-free and you should discuss your plans.
You can call us to see how we can find you a property that fits your goals and budget, that will allow you to grow a great portfolio of passive income Positive Income Properties.
Consistency is key in any financial journey. You can’t just stick to it today and forget about it for a couple of months. A sloppy step - you go back to being broke or not saving any money once again. This is because all loans - good and bad are mostly long-term. It piggybacks and sticks.
Taking realistic steps is key - make sure that it is something you can do in the long-term. It’s also important that you control bad habits once you start saving and earning better. It’s very easy to get excited and slack off when you think you’ve saved and earned enough.
Call or email us to see how we can help you in these changing times.