Good debts, bad debts
All debt is not bad . Important to understand the difference between bad and good debt .
Almost everyone uses debt to finance their lives along the way. Experts distinguish between good and bad debt. Good debt can lead to potential positive outcomes (for example, when a mortgage leads to a house and its interest payments are tax deductable), while bad debt is money spent without return (such as paying credit card interest that is expensive and comes out of your after tax dollars).
We help our clients understand the “debt cycle “process.
It is imperative that clients pay down all their bad debts that do not offer any tax deduction and are related to things like main residence, credit cards, personal assets and personal loans.
We help clients with strategies to build a portfolio of investments with deductable debt and in the process minimise tax and increase their net worth.
Here are some great tips for paying off your mortgage faster:
· Fortnightly repayments of home loan help you make extra mortgage payments every year and could save about 5 years off a 30-year loan at today’s rates.
· Maintaining higher repayments help reduce interest payments.
· Scout for cheaper interest rates thru refinancing loans.
· Should you have any windfalls like a bonus, tax refunds, inheritance, etc you should pay down the loan, as that would further reduce your interest payments and tenure of the loan.
· Set up an offset bank account against your home loan.