Have you ever wondered why it takes so long to pay off a home loan?

The reason is generally that banks make money by lending out money and charging interest for it. The longer it takes to pay off the loan, then the more money the bank makes. It is therefore in the bank's interest for you to take as long as possible to pay off the loan. That is why they structure loans that take 25 or 30 years to pay off. To give the illusion that they are looking after you they then offer a "special" interest rate. If you watch advertisements for bank home loans, you will see that interest rate is the only factor they usually talk about.

Consider this. If you borrowed $300,000 at 5% interest for 30 years and only paid the interest, you would pay 300,000 x 5/100 x 30 = $450,000 interest over the period of the loan. But, if you paid the loan at 10% interest rate over ten years you would pay $300,000. That's $150,000 you would be better off, even if you had to pay twice the interest rate.

You need a loan that uses the daily interest rate to pay off your loan quickly, that pays off your personal, non tax deductible debt first and maximises your ability to invest for your future.

Talk to us about a loan for your home or investment property that works for you, not the bank.

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Disclaimer - The information provided is not advice. It is general in nature and may not apply in all cases. Past performance can not be relied upon as an indicator of future performance. All persons must rely on their own investigations.