Home News Mortgage reduction scheme

Mortgage reduction scheme

Font size :
Nila Sweeney

Q. Recently I had a brief session with a financial adviser where we talked about my $150,000 mortgage on my residence (worth $450,000). He tried to describe to me a ‘Mortgage Reduction Plan’ which would allow me to pay off the mortgage a lot faster and with less of my after-tax income. It basically involved two new interest only loans (a personal and an investment) with a line of credit, gearing and tax deductions. After our brief discussion I was not clear on how the whole thing worked and if it was legal. Please help me.

A. There are ways to do this that won’t put you into jail. One approach would be to refinance with the existing lender or a new lender, using an all-in-one loan that puts your salary into an offset account. However, I don’t understand how he would split the mortgage into two loans with one negatively geared for tax benefits, as you can’t usually negatively gear your own home. Normally there must be some sort of rental income involved. Be very careful. Ask your advisor where the loans are coming from and then quiz the lenders or review the documentation in detail. Make sure that they know what they are lending you the money for. If you manage to get a loan under not quite legitimate circumstances, the lender is quite entitled to pull the rug out from under you when they find out.You might be just as well off with an all-in-one loan with an offset facility which would allow you to concentrate on reducing the outstanding amount and interest costs as quickly as possible.

Related: Home Loan Calculator

It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan

Mortgage News and Articles

Mortgage applications drop in second quarter Mortgage applications drop in second quarter

This marks the “beginning” of a downward trend, says Equifax executive Read more

To break monopoly, many smaller lenders could become banks To break monopoly, many smaller lenders could become banks The proposed change could break the Big Four’s monopoly over the mortgage market and help families get cheaper home loan rates ... Read more

Borrowing against the home: A strategy to pay for aged care Borrowing against the home: A strategy to pay for aged care Such debts can generally be divided into long-term and short-term loans ... Read more

NAB slashes growth forecasts for houses, units NAB slashes growth forecasts for houses, units Numerous factors, including tighter credit rules and the growing supply of new stock, have reined in Australia’s seemingly unstoppable housing market boom ... Read more

More mortgage news and articles

Sponsored Links

Saturday, Jul 22, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Whether you're a first homebuyer, looking to refinance, or investing, it's important to have the right loan for your needs. Just fill in a few details below and one of our trusted mortgage advisers will contact you.

A quick & easy way to find the right home loan
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords