Are You Relying On A Lump Sum Superannuation Payment?
Tuesday January 20, 2009
If you intend to repay your home loan lender the remainder of your home loan upon retirement with a lump sum, be careful how you split your money. It is important to figure out where your money will do the most good, as putting a large amount in your superannuation fund voluntarily in order to repay your home loan lender may not be as good value as simply putting that same money into your home loan over time.
Using home loan calculators and superannuation calculators, you should work out the likely amount of interest the extra payments will earn in your superannuation fund compared to the amount of money you would save in interest charges by putting that same amount of money into your mortgage over time. This should help you to work out where your money will be best spent.
If you find that you would need to use a lump sum superannuation payout to repay your mortgage company even if you dedicated the majority of your money to your home loan, you may need to reconsider whether your home loan is affordable. A home loan that will cost you most of your money now as well as a large chunk of your retirement savings is not really within your price range. Downgrading to a more affordable home could mean a more comfortable retirement overall.
Please visit our comparison page to compare home loans or read our home loan lender company profiles such as for the Aussie home loan lender if you are currently looking for a home loan lender.