Want to know a secret the banks don’t want you to know? It’s about your home loan.
Here’s the blunt truth about your home loan: you’re paying it back with money you’ve already paid tax on. This makes it incredibly inefficient from a tax perspective and locks you into decades of repayments, lining the banks’ pockets with astronomical interest.
Did you know a $500,000 home loan over 30 years at 5.99% interest could cost you approximately $578,034 in interest alone? You’re essentially paying back double what you borrowed! It’s a goldmine for banks, but a drain on your wealth. That’s why, for many, paying off your home loan faster isn’t just a good idea—it’s a financial imperative.
A core principle of smart money management is to prioritize paying off non-tax-deductible debt first, saving your tax-deductible debt for later.
Imagine if your investment property didn’t just grow in value but also actively helped you conquer your home loan. The right investment property—one with strong depreciation benefits and excellent rental returns in a high-demand area—can generate a surplus cash flow. We’re talking anywhere from $100 to $400 per week!
Instead of directing this positive cash flow towards your investment loan, you could funnel it directly into your non-tax-deductible home loan. This strategic move could shave years off your mortgage and keep hundreds of thousands of dollars in your pocket instead of the bank’s.
Let’s look at the incredible impact:
Beyond consistent cash flow, there’s another powerful weapon in your arsenal: capital growth. The value appreciation of your investment property can be a game-changer for your home loan.
Consider this: A $675,900 property held for 10 years on an interest-only loan, experiencing just 3% average annual growth, could swell in value to $908,353. This gives you an incredible $300,043 in equity. Even after accounting for Capital Gains Tax (CGT), sales agent fees, and solicitor costs, you could be left with approximately $199,937. Could a windfall like that pay off your home loan entirely, setting you up for a truly comfortable retirement? Absolutely.
A cash flow positive investment property is more than just an asset; it’s a powerful tool to pay down your non-tax-deductible home loan significantly faster than you ever thought possible. The upside is twofold: not only do you save years and potentially hundreds of thousands in interest, but the right investment property, chosen with solid fundamentals, will also grow in value over time, providing you with a substantial financial boost for retirement.
Ready to stop making the banks rich and start building your own financial freedom?