Are you looking to pay off your mortgage sooner? Then take a look at these six helpful tips.

1. Align your mortgage repayments with your income

If you get paid fortnightly then you should be making your mortgage payment fortnightly as opposed to paying monthly. This will cut down the payable interest over the life of the loan.

2. Increase your repayments while rates are stable

This one may seem obvious, but by increasing your mortgage repayments by as little as $20 on each payment while rates are stable, it can mean taking years of interest off in the long term.

3. Transfer lump sums into your mortgage account

Transferring lump sums such as a tax refund, work bonus or dividends from other investments into your mortgage account can help to cut years worth of interest over the life of the loan

4. Offset your loans with a savings account

By placing your savings into a mortgage offset account is another effective saving tip, whereby that amount is then subtracted from the interest payable on your loan. For example, if your loan is $300,000 and you have $100,000 in savings, you only pay mortgage interest on $200,000 – greatly reducing the amount of interest payable.

5. Have your wages paid into your offset

Because interest is charged daily, by having your wages paid into your offset account, you could save up to a few hundred dollars in interest every year. Although it doesn’t sound like much, it all adds up over a 25-30 year mortgage span.

6. Perform a mortgage health check

It’s important to check your home loan at least every year, and in some cases it may be beneficial to re-finance your existing mortgage with a different one. Reach out to one of our experienced ChapterTwo consultants today and test the health of your mortgage.

Although both variable and fixed rate loans in Australia remain low, it’s imperative that home loan borrowers are not costing themselves more money with the following home loan mistakes:

Paying a higher interest rate

According Canstar, there is a 2.26 per cent difference between the lowest and highest standard variable interest rate on home loans, meaning there could be savings to be made if your rate is currently above the market average.

Making monthly payments

By adjusting repayments from monthly to weekly or fortnightly, borrowers are able to make an extra payment each year. For example if a borrower has a $300,000 – 30-year loan, paying fortnightly instead of monthly will help them pay off their loan 4.5 years earlier, hence saving more than $20,000 in interest costs.

Not reviewing one’s home loan

It is critical that borrowers review their home loans at least every year to ensure they keep abreast of the fees and charges they are paying in the pursuit of making further savings, while mortgage brokers are able to evaluate whether or not the loan is still competitive.

With interest rates at their lowest for more than 50 years, there are some great rates available and at ChapterTwo, we can help you find them. Reach out to one of our experienced brokers today.

1. I am good with money

In the digital age, the Internet has hundreds of thousands of resources available to help you learn about money. If you don’t know how to set up a budget, or manage your money appropriately, you can research online or seek financial advice.

2. I deserve to spend my money

It’s important that you only spend your own money, not someone else’s. If you can’t pay off your outstanding credit card balance at the end of each month – you shouldn’t be using it.

3. An emergency put us in debt

Unfortunately, the nature of emergencies means they are unplanned, so it’s critical that you have an emergency fund ready should the situation arise. Poor planning does not excuse debt problems.

4. It was a great deal

We all love a deal, but it’s always important to keep on top of your spending. If your spending above and beyond your limits in the pursuit of a good deal, then your purchase decisions have become counter productive. Don’t spend just because; spend with purpose.

5. I just need to make more money

If you’re already living beyond your means, chances are you will just live further beyond what you can afford should you make more money. Gain control of your money now, no matter how much you are making, only then will a pay increase help you pay off your debts.

6. I will start my debt plan next month

Why are you waiting? Putting off addressing your debt problem for another week just means the problem becomes harder to overcome, and before you know it you have an uncontrollable debt problem. The sooner you start, the better off you’ll be.

7. It’s impossible to be debt-free

This simply isn’t true. With the right advice and the right strategy anyone can overcome debt. At ChapterTwo, we are there with you every step of the way; always offering support, advice and relieving you of stress as we bring you out of your debt cycle. We will look to freeze your interest, we will give you more time to pay your debt, and we will negotiate with your creditors for a reduced final settlement.

If debt is taking control of your life, get in touch with one of our experienced consultants for your free advice today.

In the thousands of lessons parents hope to impart on their children, proper use of credit cards is often forgotten. 

However, given credit card debt in Australia currently sits at around $32 billion, or $4,300 per card holder, it’s a talk that should receive greater attention.

Here are the four important points to convey to your child about credit cards.

Credit cards are not a tool to increase buying power

One of the biggest traps an individual can fall into is confusing their credit limit with their spending budget. Minimum payments can give the impression that you can delay paying off the outstanding amount for months at a time.

This is what leads consumers down the path of buying things they cannot afford, trapping themselves in a vicious cycle of debt. Make sure your child understands that the only purchases they should be putting onto a credit card are ones they can pay off completely at the end of the month.

Credit cards can help to improve their credit score

Although research suggests that millennials generally mistrust credit cards and banks, it’s important they understand that credit cards can be very beneficial when it comes to improving their credit score.

It’s also important that parents emphasise that if used correctly, a credit card can help their child build their credit history – which will be used in the future when trying to take out a mortgage or apply for a loan.

Credit cards can save money

In recent years banks have begun to place more emphasis on credit card rewards in a bid to secure new business. Generally, this growing competition has benefited the consumer, from free flights to travel upgrades, vouchers, discounts and cash back offers.

However it is important to convey to your child that while many of these deals are great, if used incorrectly, the costs of owning and using a credit card can quickly cancel out the benefits of these offers.

Be aware of deceptive practices

Unfortunately some banks and credit card issuers will attempt to take advantage of vulnerable consumers in the pursuit of business.

Convey to your child that should they happen to fall victim to deceptive advertising practices or any other underhanded technique by a bank, a complaint can be easily submitted to the Australian Competition and Consumer Commission.

If you, or your child, are ever in need of financial advice, reach out to one of our experienced ChapterTwo consultants today, and benefit from our comprehensive service.

Maintaining proper management of your finances is a critical component in helping you to achieve your future plans. If you’re not on track to achieving your goals, a financial planner can help you put the right strategies in place, or come up with more realistic financial goals.

We take a look at some of the common signs that you may be in need of financial assistance.

You own a business

Whether you’re thinking of starting your own business or you’re a long-term entrepreneur, knowing how to prioritise your financial goals is crucial. From managing cash flow on an income that fluctuates monthly to saving for retirement, obtaining health insurance and protecting you and your family against a loss in income is imperative.

You’re living week to week

If you’re struggling to reach your savings goals, and find that you are living week-to-week with no clear understanding as to your current financial circumstances a financial planner is often a great option. They can help you to focus on your savings goals, restructure your expenses and provide a tailored cash flow and budgeting service to help you turn the next page in your financial life.

You’re looking to make a big purchase

When looking to buy a first home or make another sizeable investment, understanding the overall effect on your cash flow, lifestyle and future goals can become overwhelming.
This is where the services of a financial planner can be invaluable in helping to determine what you can afford whilst also focusing on other financial goals and future savings.

Your family is growing

The arrival of a baby brings with it a number of financial considerations, from ensuring you have an emergency fund to cover expenses, to adjusting spending for child care, groceries, medical costs and insurance.

You don’t have a strategy for down markets

The tech bubble of 2000 and the financial crisis of 2008 were harsh reminders as to the importance of portfolio diversification. Being able to anticipate a downturn is something that often alludes even the most seasoned adviser, the difference is they can help you to adopt strategies to help protect your capital.

If you feel you may be in need of financial assistance, reach out to one of our experienced ChapterTwo consultants, who will aim to ease your financial stress whilst ensuring you benefit from our comprehensive service at all times.

When it comes to choosing a mortgage, evaluating all the available options can be a daunting and stressful prospect, particularly for first time buyers – however if you’re looking to save years and thousands of dollars off your home loan, you might want to consider a mortgage offset account.

As its name suggests, an offset account offsets the balance in that account against the balance of your home loan, which means you pay less interest. Over time these savings can add up significantly, leading to a reduction in the time it takes to pay off your loan.

For example, if you have a home loan balance of $300,000 and have $20,000 in your offset account, you’ll only pay interest on a loan balance of $280,000. As home loan interest is calculated daily, every cent in your offset account can reduce your home loan interest daily.

Furthermore, the offset account is set up so that it matches the interest rate of the mortgage, meaning interest earned in the account will also offset the mortgage interest – leading to further savings of which are completely tax-free.

Attractive to Investors

This scheme can also be attractive to property investors, who can reap significant tax benefits by taking out an interest-only loan with an offset account.

Interest-only home loans with an offset facility allow investors to reduce their monthly repayments, minimise their non-deductible debt (and increase deductible debt), as well as securing a good return when purchasing a principal place of residence (PPR) and converting an existing home into an investment property.

Furthermore, taking out an interest-only loan with an offset account can be an effective tax strategy if you have the financial discipline to make regular extra repayments into the offset account, thus reducing the amount of interest payable on your mortgage.

What are the benefits of using an offset account on an interest-only loan?

Lower repayments:  Paying the interest-only portion of the loan means periodic repayments will be lower, freeing up cash for other investments.
Tax deduction:  A tax deduction can be claimed for interest paid on a property if it is clear that the purpose of the loan is for investment purposes. To claim the interest as a tax deduction, focus on reducing the interest payable on the non-deductible debt.
Separation of debt:  An interest-only home loan allows the original debt to be kept separate, meaning savings can be placed into an offset account against any debt that’s not tax deductible.
Contingency buffer:  An interest-only mortgage with an offset facility effectively provides a contingency buffer to cover unexpected costs or a lifestyle change, i.e. turning a home into an income-producing asset.

How to set up this structure

Before taking out a loan with an offset account, it’s important to work with a savvy mortgage broker, financial planner or tax specialist to evaluate your financial position. Identify the amount that you can afford to put into the offset account each month and discuss your investment strategy with them to see whether this structure will allow you to meet your financial goals.

For some free financial advice, get in touch with one of our experienced ChapterTwo consultants today.

Australians traditionally love their credit cards. Collectively, we are currently paying interest on almost $35 billion of credit card debt (Canstar), however that doesn’t stop the banks from pursuing new business by tempting consumers with an array of ‘zero per cent’ balance transfer offers.

Balance transfers allow customers to shift their existing credit card balance to a rival and not pay any interest on that amount for a limited period. 

Interest rate comparison website Canstar says there are a record 97 balance transfer offers being promoted, up from 56 two years ago, with most offering interest free periods of at least 12 months.

If you’ve got a sizeable credit card debt, these can look appealing, however before being tempted by the prospect of paying no interest for a year or more, consumers should be aware of a few big traps. 
What should I look out for?

Historically, big banks will spruik their balance transfer offerings when consumers are at their most vulnerable – just after Christmas.

If you’re not disciplined about paying off the balance before the end of the period, any savings you’ve made can quickly be gobbled up by very high interest rates.

According to Canstar, about two thirds of cards offering balance transfer deals revert to an interest rate of 20 per cent or more after the interest free period.

It’s also worth remembering that the ‘zero per cent’ interest only covers the balance you bring across, not new purchases, which will often be charged interest at a much higher rate.

Some cards also charge a ‘balance transfer fee’ of around 2-3 per cent of the amount you are transferring, while others have an annual fee to consider.

Given all these costs and potential risks, some blame balance transfer offers for putting customers into more debt than they can afford, prompting a recent inquiry to recommend tighter restrictions on their use. For now though, it’s up to consumers to weigh up the risks before being tempted by a balance transfer deal.

If you have a credit card problem or are after some free general financial advice, get in touch with one of our ChapterTwo consultants today.

Obtaining a great rate on a mortgage is about more than just comparing lenders. The mortgage industry examines a number of factors to determine not only if you qualify for a mortgage, but also what interest rate you’ll pay.

Mortgage lending today is based on tiered pricing, which means that rates are adjusted based on various criteria. The difference can mean a much higher or lower monthly payment and tens of thousands of dollars in interest payments over the life of the loan.

Below are some of the key criteria that mortgage lenders evaluate, as well as some tips you can use to improve your current standing.

Credit Scores

Your credit score is one of the most influential tools used to evaluate your financial profile, whereby all things being equal, the higher your credit score, the lower your mortgage rate.

Checking your credit score is easy and free through sites such as GetCreditScore.com.au, which ranks consumers credit history from zero to 1200, providing a realistic snapshot of their financial status before they approach a lender.

A credit score can be affected by late payments, whether an overdue bill was eventually paid, the amount owed in a missed payment and whether there were consecutive missed payments.

If you have a good or excellent score between 622 and 1200, then you can feel confident when approaching a credit provider for credit.

Employment and Income Stability

Mortgage lenders prefer candidates that can prove steady employment for at least the past two years. Long periods of unemployment won’t bode well for your application, and neither will a pattern of declining earnings. Ideal candidates will have been at the same job for at least the last two years, or have made a job change to a higher paying position during that time.

As a general rule, you’ll need a minimum down payment of 20% of the purchase price of your home in order to get the best mortgage rate. Any less than this and lenders will require you to pay private mortgage insurance.

In Australia, private mortgage insurance typically costs from 0.5% to 1% of the entire loan amount on an annual basis. 

Cash Reserves

In the mortgage world, cash reserves are measured in terms of the number of months worth of house payments you have saved in cash.

The standard requirement for cash reserves on a mortgage is two months – as in you must have enough liquid cash after closing to cover your new mortgage payment (principal, interest, taxes, and insurance) for at least the next 60 days. On higher risk mortgages, the cash reserve requirement may be higher.

Finding the Best Mortgage Rates

Once you’ve positioned yourself for the best mortgage rate, it’s time to comparison shop. 

This can be a time-consuming, confusing, and even emotional process with low rates accounting for just one aspect of choosing a lender, so it’s important that consumers take their time and shop around before settling on a mortgage. Alternatively, you can speak to a mortgage broker for advice and variety on rates,

If you’re in the market for a new mortgage, or would like to better understand your options when it comes to refinancing an existing one, get in touch with one of our ChapterTwo

Up to 500,000 Australians are at risk of becoming, or are, problem gamblers (Australian Government), with the actions of one problem gambler negatively impacting the lives of between five and 10 others. This means there are up to five million Australians who could be affected by problem gambling each year, including friends, family and employers of people with a gambling problem.

People with gambling problems and gambling addiction often end up in significant debt, often spread across credit cards, loans and in some cases even home equity. We’ve outlined a number of methods to help deal with gambling debt and avoid it in the future.

1. Cut off your source of funding

If you’ve been gambling with credit cards and are beginning to amass unsustainable levels of debt, closing them may become your best option. Although it will affect your credit score, closing your credit cards will ultimately keep you from creating more debt. You can also put a freeze on your credit report to make it harder to open new credit card or loan accounts, however it’s important to remain mindful that you’ll need to unfreeze your credit report to open any type of account that requires a credit check.

2. Realise that more gambling is not going to solve the problem

Unfortunately, many gamblers fall into the trap of thinking they can win enough money to pay back their debts, when more often than not the opposite occurs, creating even more gambling debt to repay.

3. Get treatment for your gambling addiction

Seeking treatment for gambling addiction can also be a useful method in helping to get you back on track, services such as Gambling Help Online can be useful places to start. In some cases health insurance providers may also pay for treatment for gambling addiction.

4. Paying Off Gambling Debt

Once the addiction is brought under control, attention should then turn to servicing the debt. Start by writing out a list of all the money you owe so you can take action. Put all the debts you can think of on the list and if you learn of any new gambling debts, add them to the list also. You could sell valuable assets and use them to pay off your gambling debt including furniture, electronics, jewellery or even your car, while a second job is also a useful tool in helping to pay off your debt.

Creditors may also be willing to accept a settlement payment on your gambling debts in an effort to avoid bankruptcy. This can be achieved by coming up with a percentage of what you owe, perhaps by asking family or friends of refinancing an existing mortgage.

If gambling debt has taken control of your life, or if you need any general financial advise, get in touch with one of our ChapterTwo consultants today.