A modern home interior in Perth where the loan has been reduced by Mike Mackenzie

Things to Consider if You Have a Home Loan

Meet Mike Mackenzie

I’m Mike Mackenzie your local mortgage broker. I’ve got a passion for property, so no matter what stage in the property journey you are on there is a good chance I have personally done it myself. Let me explain.

I bought my first home which was a house and land package when I was 19, I then bought my first investment property when I was 23 and followed that up with a second purchase when I was 25. I subdivided the block and renovated the front house and sold it while building a new house out the back of it. When I was 29, I bought an eight-unit development site in a trust.

The topics I’m covering in this blog include how to buy your first home – for people who don’t have their own home yet. I will also be discussing the importance of budgeting, how you can pay your loan off in half the time, and loan structure. These topics are for people who already have a home loan, but they are great things to keep in mind as a first home buyer as well.

Headshot of Mike Mackenzie, mortgage broker in Perth

How to Buy Your First Home

If you are a first home buyer, then that’s great because I can set you up in the right way and give you the correct habits from the start. We have many schemes and grants available to help you buy your first home.

I can help you find the right solution for your needs to get you the best deal possible. If you are a first home buyer and in need of some assistance finding the right loan, get in touch with me today.

First Home Super Saver Scheme

One scheme that I would suggest is the first home super saver scheme that can minimize your tax and build up your deposit faster. You can voluntarily put in up to $15k per year for a max of $30k. That money can grow in the scheme and if you wait long enough you can take out up to $50k to buy your first home. If you’re planning to buy a house in 12-18 months, then this is a great way to save on tax and force save for that house.


Another way is to refinance your home and use the equity that is sitting in your home to buy the next investment house. We must make sure we don’t cross securitize your assets and if this has already happened (or you’re not sure if this has happened) please talk to me so I can fix/check this for you.

The Importance of Sticking to Your Budget

Do you have a budget? Do you stick to it 100% of the time?

Budgeting for most people can be quite boring. That’s why I do everything I can to try to make it easier for you. Plus, we live in a world where it’s so easy to tap your card and go, that you don’t even realise how much you are spending and on what.

As a broker, I have access to some great software that can take your bank statements for the last 12 months and put it into an easy-to-read excel spreadsheet. It tells you how much you spend on fuel as well as how many times you go to a particular store and how much you spend.

I use this type of software so I can go through your expenses. I look at where we can cut the fat so we can build your savings quickly. For example, many households now have multiple streaming accounts and little subscriptions here and there but when you add them up it’s scary how much per month we are spending on them. Soon you’ll see how small changes will make your life so much better in a short period of time.

 Cash Deck is an amazing software that runs the same security encryptions that your bank runs so it’s safe to use and gives you access to all your data in a way you have never seen before. This is an incredible way of finding out what your real numbers are in your budget.

How to Pay Your Loan Off in Half the Time

Pay More Than the Minimum

If you make the minimum repayments it takes nearly 14 years until you start paying more off your principal than interest to the bank, which is why if your budget and hit the loan hard at the start, you will save thousands of dollars. This is because over 30 years this $500,000 loan is going to cost you $865,000 if you make the minimum repayments. You would have paid $375,000 to reduce your mortgage by $147,000.

I will soon discuss the payoff of following a budget since it can be hard to delay gratification in this consumer-driven lifestyle as we get pressured daily. But if I told you that by tightening your belt for a few years you can make huge jumps in paying off your mortgage, then imagine how much easier life would be without a mortgage.

Obviously, the higher income you have the easier it is to cut your budget down (without being forced to live off two-minute noodles), by making extra repayments to your loan.

Extra Payments Example

By paying an extra $1200 a month or 50% more on the mortgage than the minimum monthly repayment which most people should be able to do with a bit of budgeting, you can save $188,000 over the life of the loan and pay it off in half the time.

For most people, this will mean that when your kids leave home you would be kid-free and mortgage free rather than having to pay a mortgage for another 15 years before you can enjoy retirement. Following a budget can be tough when you don’t have a goal but being mortgage free when you’re kid free might make it easier to give up three of the four streaming services you currently might have.

By doubling the minimum monthly repayment and paying $4,800 a month you can save $248,000 in interest repayments and pay your home off in 11 years.

By paying $7,200 a month which is three times the minimum repayments you can save $293k in interest and pay your mortgage off in seven years.

Do You Have the Right Loan Structure?

We may be able to use your current structure, or we may have to refinance you to get the proper loan structure.

It’s so important to remember that the structure is more important than the interest rate.

You need to have a fully transactional home loan that allows you to redraw without fees. You would be surprised how many home loans don’t have this option.

You can do it with an offset account as well but generally, you must pay a premium for that luxury, and we are trying to save every dollar we can. If you are unsure what the right loan structure is for you, just book an appointment with me to find out.

Interest Only Investment

How many people have been told that interest only is the devil? I bet most people have been told this at some point in their life.

Interest only can certainly be bad if you don’t use it wisely but if you use it properly it can be an amazing tool that will allow you to pay your home loan off even quicker, especially if you don’t want to go as hard in the budgeting area.

Interest only lasts for five or ten years in most cases which means for that time frame we get to take an extra $5,700 off your home loan and pay it down even quicker. This keeps the interest high on your investment debt while lowering your personal debt (and this is where your double benefits kick into gear again – where you can get a bigger tax return).

You will have a problem if you spend your $110 cash flow each week and when the loan flips to principal and interest, you are in trouble since you need to come up with an extra $165 each week out of nowhere, which is tough when you don’t budget.

How to know if your loan needs to be restructured

  • Do you have an offset account?
  • Do you have to pay for a redraw?
  • Do you have savings outside your home loan?
  • Do you have a car loan?
  • Do you have a credit card that isn’t paid off every month?

If you answered Yes to any of these questions, we need to talk to get you in the right structure.

What Can I Do for You Today?

Hopefully, you’ve learned a lot about things you can do for your home loan. I hope you can now confidently make more informed decisions about your home loan and where to go from here.

If there is anything you require assistance with, I’m the mortgage broker that can help! Please don’t hesitate to book an appointment with me so we can get started on financing your future.