My Loans

Loans come in many different types and size, from a $100.00 borrowing from your mother to millions of dollars for a family home. Many people these days have all sorts of loans from $1,000 credit cards, personal loans, car loans through to millions of dollars as a home loan. All needing to have at least the interest payment made each month. The interest rate in Australia ranges around from 17 – 20 % for credit cards through to your mortgage variable rate of around 7.5% at the moment.

New Prosperity has several different categories of loans:

  • Property Loans
  • Investment Loans
  • Credit cards
  • Personal Loans
  • Business Loans    (Sole trader)
  • Car loans 

The average household spends 20 – 30 % of their disposable income on the loan payments for the household. Managing the interest rate cost each month is a daunting task for many. Even if you do manage the payments on a monthly basis, it is still one of the most inefficient aspects of ones ability to create wealth. Many thousands of dollars can be saved by managing your loans more efficiently.

The way the banks have introduced a culture of borrowing into society is to say the least very much loaded in their favour. Think about it, a loan is applied with a credit application, loan is approved, the loan funds are spent, then it is left up to the borrower to repay the loan as indicated on the loan contract or sooner in many cases if possible. Not at any time does the lender or financier call you up and ask how you are coping with the money you borrowed from them several years earlier. Usually you are left to understand and educate yourself about how to manage your cost of repayments each month. The only time you hear from any one about your loan is when you miss several payments or the financier forecloses on your loan and sells you up.

New Prosperity will empower and educate you to understand the amount of interest you are paying on all your existing loans, allow for any offsets on tax deductible interest you might be receiving. You will then discover what percentage of your disposable income is being taken in pure interest cost and principal reductions. Once you understand this with respect to your total Annual Surplus after tax. You will understand the true cost in dollar terms of all your loans, then better understand the impact, they have on your lifestyle. Once this is understood you can then apply extra affordable payments to your loans and reduce the interest cost to you and your family by a dramatic amount.

Think of every dollar that is applied to principle reduction is a dollar that the financier will not charge interest on. This compounding of interest saved effect, applied month on month is incredibly powerful saving of interest cost for you and your family. 

SCENARIOS:

Once all information is inputted, this is when New Prosperity becomes empowering to you. At this time you can model loan scenarios, look at the impact of applying extra repayments with tax dollars from your Annual Surplus.

A simple one is investigating the impact on your household cashflow with respect to the prospect of buying a new investment property in the current interest rate environment! Stress testing your existing Annual surplus with the new proposed loan or just stress testing your current loan with increased interest rates and see what impact it has on your after tax net Income.

Managing existing and proposed loans is very important with respect to your wealth building aspirations for you and your family.