Home Lending “The Secret Formula”

You are unauthorized to view this page.

You’ll see promises our there of a secret formula to repay your home loan in a ¼ of a time.

Don’t get me wrong, many of these work. However, it’s not necessarily the secret formula which works but the fact they create a system to follow and encourage discipline.

I liken it to when I tried a high fat, low carb diet and lost a bunch of weight.

  • Was it because of the high fat, low carb diet? Or simply because I cut out all the takeaways, chocolate and ate a lot more fruit a vegetables?
  • There is a fair chance it was because of the latter.

What’s my point?

  • The human behaviour aspect of money management is much more important than a secret formula.
  • A standard home loan is a long time – up to 30 years. It’s hard to plan this long (actually impossible, you are just making guesses about the future).
  • Maintaining discipline for a 30 year period is……really really hard.

By having a broad plan that shows that you could pay off your home loan in 15 years, through increased repayments and a structure that works for you can help you create habit and discipline. Just the thought and vision that you can do it helps to create the right environment for you to actually action it.

So what is the secret ‘formula’?

  • It’s often a revolving credit facility (which will talk about soon)
  • Pay for everything on a credit card, using the interest free period, and pay it off the following month using the revolving credit.
  • Increased repayments.

The system can work, I will show you this. However, it also promotes spending on a credit card, which can create habits that are hard to break.