Home owners could save up to $50,000 on their mortgages thanks to the Stage 3 tax cuts, and experts say using the cash to pay down debt offers a guaranteed return.
“You almost can’t go wrong by putting extra into your loan,” Canstar finance expert Steve Mickenbecker said. “Most loans these days have redraw, and redraw means that if you’ve made extra repayments and you decide you need the money anyway you can pull it back out.” “It reduces your loan balance faster if you put money into your loan or offset account as often as you can,” Amiridis said. “By putting that extra cash you’re saving on tax into your loan, a single person pays it off four years and four months earlier, and for a couple it’s seven years and five months.”
“When you compare it to investing you’re getting a guaranteed outcome. Paying money off your mortgage. Depending on what your interest rate is, it’s a guaranteed return on your money,” Hitch said. Mickenbecker said first home buyers could also benefit from the tax changes, as they would have more borrowing power than before. He said it was important for those who had already been given pre-approval to update their incomes with their banks to reflect the new tax rates.
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