r/AusFinance • u/jennis89 • 23h ago
Mortgage advise Debt
Hey team looking for some unbiased mortgage advice if anyone can give their opinion.
Iv got $590k left on my home valued at around $850k and 25 years left on my current home loan. When I renew should I renew for 24 years or lower or renew for 25-30 years to have a lower min payment but make additional payments each month to pay it off quicker?
My financial advisor has said take the loan over longer period to reduce the minimum payment each month to reduce your required monthly outgoings but do the additional payments to pay off quicker.
Also at the moment I pay around 300 extra per month into my offset account so it is slowly building up it’s around $40k, is it better to pay that 300 extra directly into the home loan or keep topping up offset so it’s lowering your interest on the repayment.
What is your all take?
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u/walkin2it 22h ago
Haven't run the excel calcs but I'm guessing it'll translate to about the same for you.
I reckon your broker will get more commission however as their commission is probably calculated on the assumption you will pay it off with the regular payments over the life of the loan.
There's heaps of YouTube tutorials on how to create a mortgage calculator.
I've given you the above with all care and no responsibility or calculations, it's purely instinct. Good luck.
Edit: I forgot to ask, is it the same interest rate for both? If there's a different interest rate it changes things.
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u/whatpelican00 21h ago
As a broker I would be reluctant to extend your term unless you have a specific need. I get the argument for lower minimum repays, but if you plan to pay it off at the lower term anyway, and you’re comfy with the repayments and disciplined, I generally say keep the current term. The term of the loan doesn’t impact the upfront comms paid to a broker by the way. Trail is paid monthly yes, but it’s highly unlikely the loan will go for 24years with the same lender anyway, or that you’d even stay with that broker when you might refinance next. It certainly doesn’t factor in to any recommendations I’ve made over 20+years..
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u/yesyesnono123446 16h ago
It depends what your financial plan is.
Planning to do any extra super or shares before the house is paid off? Might you turn it into an IP?
Having more debt and more cash can be useful but it's easy to spend it too.
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u/onlythehighlight 22h ago
How good are you with your finance is all that you need to know and does having that little extra bit of income help?
If you are good with your finance and right now you don't need the extra bit, stuff it into your offset so it lowers your interest (which is the important bit) and just keep it there unless you need it for something.