“Nathan & Deanne are the best! Prompt, professional & friendly service. Nothing was too much trouble. We are very grateful for all their help & advice. Thanks!”
J & K Damonse, Hilton WA
“I am very happy with the attention you paid to me in explaining to me in plain English the set up. I also am happy with the way you and your staff made the process simple and easy to do.”
T Smart, Wanneroo WA
“I thought the service was great. It was very informative. You walked me through the process and finalised everything very quickly. I don’t think there is anything further you could have done. I will certainly recommend you to others.”
J Want, Churchlands WA
“Once again Nathan, thank you. We also keep plugging your name and brilliance to our friends and co-workers, but we need some more business cards as we have given them all away.”
R & K Williams, Yanchep WA
“Thanks heaps for your prompt attention you and Nathan have been wonderful, the service has been excellent.”
E & J Harrison, Halls Head WA
“Very professional & helpful service. I felt I received personal service.”
S Fraser, Alfred Cove WA
“Nathan made things really simple. As someone new to the home buying game, it was important to feel trust. My Mortgage Man made me feel he had my interests at heart right from the start and he evidenced this in his words and actions throughout the process. It was great to know he was only a direct phone call away for any queries and concerns I had and this continues to be the case now I have purchased the property (no ‘seal the deal and run!)”
S Layhe, Mount Hawthorn WA
“Thanks for the chance to reorganise my money situation. I’m very pleased with the set up. I’ve never budgeted before and a forced plan is the best thing for myself. I’m really impressed with the response to all questions & enquires and how friendly and helpful you all have been.”
M Pollock, Ballajura WA
“I have received the donation from Nathan and wanted to say a very big thank you to you both. The money has been allocated to my project and will be used for running a lifeskills course with some of the young people who are struggling in a few areas and have little family support. Workshops will include cooking and budgeting (which I’m sure you’ll both appreciate?) as well as some health related education workshops and rec activities.
Also as we have told a lot of people about how great you are, would you mind sending us through a few business cards. Thanks again for your help.”
N Toussaint & D Wright, Bayswater WA
Tips & Tricks
We offer the following tips and tricks below to help get your money working in your favour. Click an item below to jump to the corresponding section...
Money Flow | Recycling Bad Debt | Master Limit
Money Flow
My goal is to get your money working in your favour. This initially has to do with how the loan is structured. Then after settlement, the most important time, is to make sure you have the flow of money working so that it is automated.
When done correctly you won’t have to worry about where to find the money to pay the next rates bill. You won’t have to worry if an emergency occurs. You won’t have to worry about being stuck in bad debt for the next 30 years!
All-In-One Loan Account
And I am not talking about a Line of Credit. All-In-One Loan accounts take the best from a standard Principal & Interest and a Line of Credit styled loan. An All-In-One Loan Account gives you flexibility to change the flow of money depending on your current situation without being charged fees to do so. Some All-In-One Loan Accounts also allow:
- Free Unlimited Redraw
– perfect for saving money off your long term expenses - Direct Salary Crediting
– gets your money working for you on a daily basis - Portability
– sell your home and buy another one without having to close and re-open a loan account, saving you thousands in fees - 4 free splits
– for future investing and retirement planning this is a great tool to have at your fingertips - Telephone & Internet Banking
– with today’s technology this should be a standard feature that allows you to check your balance and transfer funds at any time at your convenience
3 Ways to Manage Your All-In-One Loan Account
Option 1
This set up is the basic standard way to manage your money. All money goes into your cheque or savings account from where you pay your loan and spend your money. Even this type of loan structure can be changed to work harder for you.
How long do you want to pay off your home loan? Instead of paying what the banks ask you to pay into your home loan, the minimum, you can add extra. The only way to reduce a loan quickly is to pay extra but what happens if you use your loan account to hold money for future expenses, holidays and emergencies.
Sometimes it feels like all the big bills come at once. So why not plan for their arrival buy adding them to your loan repayment. Then when the bill arrives you can redraw the money from your loan to pay, stress free.
When you transfer the money you can state the reason for the redraw. This now becomes a record of your long term expenses, making it more accurate and easy to calculate in the future without having to budget!
Essentially what you are doing in this case is saving whatever interest rate your loan is at off your long term expenses. Wouldn’t you like to receive for example 8.50% discount off your long term expenses every year, guaranteed!
But is there a better way?
Option 2
This set up is similar to a Line of Credit with a very important difference. All of the income goes directly from the employer into the home loan. This now means that your money is saving you interest on a daily basis.
With Lines of Credit you spend from the loan account. This is very dangerous because it is too easy to lose track of what is your money to spend, what is the loan repayment and which amount is surplus or does that pay the credit card???
To maximise this loan set up is to do the same as Option 1 but do it backwards. So you need to take the minimum loan repayment, add extra to pay it off quickly, calculate your long term expenses and leave this money in the loan until the bills arrive for you to redraw.
The rest of the money is for your day to day living that includes short term bills, food, fuel and lifestyle. The best way to structure this is to set up a weekly or fortnightly living amount. For example you can set up for the home loan to pay into your nominated cheque or savings account $350 per week. After a couple of months you will know if this needs to be adjusted up or down slightly.
Important Note: You must set up a regular payment to yourself. If you find that you are pulling extra out, $100 here and $50 there, you will fail to achieve the goals you set for yourself. The whole point is that it is automated except when doing a redraw for long term expenses, holidays and emergencies.
Once you understand how this system works you will reap the benefit of seeing your home loan (bad debt) reduce far more quickly than a conventional styled loan. This will save you thousands in banks interest and years off the life of the loan.
Option 3
Option 3 is only available when you have more than 1 source of income. So you may work full time in a job and receive Family Allowance, a pension or have a second job. Or your partner may work therefore 2 incomes need to be directed.
This is common for one income earner to have all of their income go into the loan account and the other party has their income go into the cheque or savings account and this is the money they live off. This does work well but there are a few pitfalls to be wary of.
What happens when one income reduces or stops all together? What happens when the income to be spent rises dramatically? Does this mean your spending increases automatically too?
The 7th Secret of Money Management states that when ever you receive a pay rise you should take 50% and spend it on what ever you like! The other 50% should be put towards your future. With Option 2 it is very easy to do this because you already have set up an automatic living amount that is paid to you on a weekly or fortnightly basis.
Summary
As you can see having a loan product with flexible features like Direct Salary Crediting will assist you to have your money structured to be working in your favour. Even if you decide to use Option 1 you are never restricted to changing to Option 2 in the future. With a little time and the support from me, the preferred scenario is easy to set up for you after your loan settles.
Recycling Bad Debt
This is an advanced technique of reducing your home loan quicker than the standard way of paying your home loan. It is a very basic concept that must be executed with professional help and advice. There are tax implications that need to be understood and I recommend you seek Financial Advice to make sure it suits your risk profile.
The basic concept still needs to be structured correctly from a loan point of view so you can receive the maximum benefits. The All-In-One Loan Account allows up to 4 splits. At this point it time this may not interest you but if in the future you decided to invest in Managed Funds, Shares or an Investment Property this feature is vitally important.
The basic concept works like this. For example:
Your home is worth $500,000 and you owe $350,000. With time your loan reduces to $325,000. You now have $25,000 to use to purchase what I call good debt.
Good debt gives you either a rental or dividend income, tax deductions and can generate a capital growth. The rental income can go towards paying your bad debt (the home loan). But how does an accountant separate good and bad debt at tax time?
Good Debt = Tax Deductible = Investments
Bad Debt = Non Tax Deductible = Home Loan
This is where we can use the split feature. You can split off the $25,000 available in your loan facility and use that money to invest in good debt. Now the accountant can clearly see what it and isn’t tax deductible. The split feature once set up can be made automated as well. This will save you from having to transfer funds to pay for any interest incurred for your investment.
Summary
The goal here is to increase your good debt and reduce your bad debt at the same time. So by the time you retire your home loan is paid out in total and the income generated from the good debt is paying for itself and maybe some extra left over that can compliment your Super. This is commonly called in accounting terms as Cash Flow Positive.
Master Limit
This is another unique feature of the White Label All-In-One Loan Accounts on the market. I touched on it briefly when discussing the Recycling of Bad Debt. Essentially it is the ability to access unused funds for good debt. It gives you more control when planning for retirement without the hassle of refinancing every time you wish take advantage of opportunities that help you create wealth.
Some lenders allow you to go to 90% of the value of the property, which I believe can be potentially dangerous if you do not seek professional advice and try and “do it yourself”. Also when your loan is greater than 80% of the value of your property you will be charged Lender’s Mortgage Insurance. This fee can be very high and all it covers is the banks interest, not yours!
So for example:
If your property is worth $500,000 and your loan is $350,000 you can apply for a Master Limit of 80% or $400,000. The extra $50,000 is structured as a separate split that can be accessed for investment purposes at any time.
I see many people with a Line of Credit that allows them to continually redraw up to the limit but there is no discipline. People buy cars, boats and furniture without thinking of the consequences. Essentially they are buying Ugly Debt (Material goods that do not generate an income, gives you no tax deductions and goes backwards in value!). If there is no plan to increase your loan repayments when buying a boat with your home loan then you will be paying off that boat over the next 30 years. The interest repayments on that can easily ending up costing you three times the value of the boat! This is not what a Master Limit is for.
The Master Limit can be arranged at the same time as setting up your loan. This will save you bank fees and charges in the future when you want to apply for an increase.
The Master Limit is a separate split on your loan account and can be easily accessed at your request by contacting us at Simplify Your Mortgage.
Features
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Benefits
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Summary
The Master Limit is for Wealth Creation. If the opportunity does not arise you are not charged to have these funds available. It is the perfect tool that will allow you to plan for your retirement. I recommend that you seek professional advice before you access these funds to ensure that you benefit from any tax deductions and understand any capital gains tax implications.
Nathan Daniell (AMC)
Mobile: 0413 615 913
Phone: 1300 856 890
Email: nathan@sym.net.au
Full Member of the MFAA
Mortgage & Finance Association of Australia
License Number – FB3620