Home Loan Debt: Shrink Your Mortgage
For most of us, the daunting part of a mortgage is probably not the thought of fixing roots in one place but instead the notion of being tied to a debt for decades. With that in mind, who wouldn't like to shave years off this debt? A novel new product might let you do just that with very little effort. MoneyBuddy explores debt-busting concept Schreditcard as a home loan shortening godsend.
Schreditcard: What Is It All About?
Novel and practical, the Schreditcard notion advocates a move to allow borrowers to put their entire salary onto a credit card. This move would immediately reduce the balance by allowing left over cash each month to eat away at the debt. Even after regular monthly expenses, your extra funds can work hard to minimise the figure owed reduce stinging interest fees and get you into the black sooner.
Reducing Home Loan Debt: The Schredit Mortgage Solution
Pre-Approved Finance, the company behind Schreditcard, encourage using the Schreditcard system to eliminate credit card debt and then using the spare cash against your mortgage, thus reducing the mortgage term considerably. The innovative process has been dubbed "Schredit Mortgage".
Schreditcard founder Peter Kates said, "There is no magic secret about paying your mortgage off faster, if you make regular additional repayments into your mortgage it will save you thousands and take years off. The question is, where does the extra cash come from? The answer: use the Schreditcard to get rid of your card and you will free up cash to make additional repayments. It's a common sense approach."
The Smart Mortgage Debt Solution
Schreditcard uses the example of a $10,000 credit card debt, paid off using the Schreditcard method, with funds redirected to a mortgage. If that mortgage is $300,000 over 30 years at 7% ($1,996 in repayments per month), the minimum payments on the old credit card balance (approximately $200 on $10,000) could allow a cut of seven years from the mortgage length. A mortgage payment of just $100 per month could save $69,000 and take four years off the length of the home loan. When put like this the argument is quite compelling.
Unfortunately, the Schreditcard program is yet to be taken up by any financial institution, so whilst there are certain savings accounts that allow for salary credit, a similar credit card product could be a long way off. Extra payments on your mortgage are the key to reducing its term, so it's a good idea to keep an eye out for a credit card allowing full salary credit, if one becomes available. If enough people make the case to their financial institution, this could occur sooner that you'd think – allowing millions of people to enjoy post-mortgage bliss sooner also.