Following along on our mortgage hacks theme from the past couple weeks, where we touched on paying more than the minimum, as well as how to utilise Offset accounts effectively versus paying more frequently.
Another Mortgage Hack
This week I want to keep it short and sweet and talk about having your wage paid directly into the mortgage account, and what that might look like from a money management perspective.
I will be the first to admit that if there is money in my account, I’m pretty likely to spend it – and don’t even get me started on justifying the spend – I could write the book. I also hate when the mortgage payment comes out at the end of the month, in one hit and I feel broke again. I do much better when I can’t see the money going in to the account, and I know what I have in my spending account each week is mine to do with what I please.
You simply have to set yourself up for success.
This is why I love the wage being direct credited to the loan account. You can set this strategy up a number of ways – and this will ultimately be dependant on the type of loan you have, and the payment cycle. This could also depend on your workplace and their abilities – some employers will not allow a split, or will only allow a couple, so you need to check with them too. Every home loan has a BSB and an Account number, so all you need to do, is give your employer these details and they can deposit into it just like any other account.
Some clients like to deposit their entire wage into the home loan, and then redraw out what they need for the week – personally, a slippery slope. What’s to stop you dipping in for more mid month? I would say the better way to manage it, would be to split your pay into several accounts. You can even set your mortgage up to be two people to sign, so that accessing that redraw is just a little bit more difficult (only works when there are two people on the loan).
The above strategy isn’t necessarily about saving the most interest, or dodging fees – but more about what is simply going to work for your personal money management style. Yes, the lowest rate and fees is great – but other features such as convenience, flexibility, and compatibility are also huge considerations when choosing a loan structure. You simply have to set yourself up for success.
Now, as I mentioned, this doesn’t work for all loan types, and we can help you understand if your loan is compatible, and even switch it to something that works better for you – that’s our job. If you think this could be something that might work for you, don’t hesitate to ask us – we are happy to help.