By John E Edwards
The banks have so much control over you and your life.. You really have to fight to reduce your dependence on the bank as a source of funds. It’s just too easy to go along. Its made so easy to get into debt. The banks’ focus is to make a profit for their shareholders. The banks’ marketing strategy is to ensure that the householder has the maximum level of loans, which can be repaid consistently, to maximize profits. Lets look at the level of profitability of bank loans.
Mortgages…………………………………….5 – 6% interest
Business loans……………………………9% interest
Personal loans…………………………….12 -18% interest
Credit Cards…………………………………17 to 24% interest
Draw up a list of all the loans mortgages, credit cards, car loans, store cards. Write down 5 columns across the paper with the following headings.
Bank name ,
Type of debt product,
Balance owning ,
The Interest ,
Monthly payment
Is this you?
Usually the first significant purchase of a person or a couple is a house. (Note the interest above.)
Immediately the householder receives a number of credit cards sent to them and without advice or training uses those cards to develop the house (see the interest above)
Twelve months later they find that they are carrying far too much debt and become concerned about it.
They now have no cash balances and are totally dependent on the banks as sources of cash and credit.
Then comes the car. The banks then lend the money for a car at 12 -15%
What do you have to know that takes away the power of the banks, and the banks don’t want you to know…
It’s this. A well organized mortgage home loan can allow the householder to self fund their personal loan and credit card requirements normally sourced from the banks. That anyone can do it and the result is the same for all people. The banks’ fear is they will only “get” the low profit home loan and miss out on all the normal profit. See table above.
When you start seeing a mortgage as wealth creation to you right mental attitude to wealth creation and breaking your dependence of the bank. How can that happen? Its all about making additional payment into your mortgage on a consistent basis. Contact a mortgage broker show you the software and calculators that can demonstrate this. . Households need to .
Paying additional payments into the mortgage
Redraw money from the home loan, rather than go to the bank for credit cxards and personal loans.
A surplus of $500 – $1000 a month can have a huge impact on the mortgage balances. How can these surpluses be created? The simplest and least intrusive method is to debt consolidate all old debt with very high interest rates , replaced by new debt with low interest rates. This will creates a mortgage consolidated surplus. Use this consolidated debt surplus to create wealth by putting it in the mortgage.
How it works
House with a $300,000 mortgage
Paying 5.09%
30 year mortgage
Paying $1627 per month in repayments
A consolidated debt or budget surplus of $1000 a month that is paid into the mortgage.
In 12 months you would have a redraw balance in the mortgage of $12,336. Would this take care of most of the issues that come up that normally would require credit cards and personal loans?. In 24 months the redraw balance is $26,314. Now you are heading to financial independence from the banks.
A determination to break the cycle and patience to build your cash balances before you start spending is the key. Just knowing gives you the motivation to get to the redraw cash balance to gain the confidence to move forward to real wealth.
Now you have the facts to plan moving forward. So don’t talk yourself out of contacting a Mortgage Broker. Sitting and doing nothing only increases the stress and anxiety, not a good option.
John E Edwards has written many articles and made countless presentation on a mortgage is a wealth creation tool and its uses of the tool. John E Edwards is very active in the Finance market. To contact a broker http://mortgagesolutions.home-equity.com.au or http://mortgageanswers.home-equity.com.au
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