calendar October 27 2016

purchase racehorse pool car
Remember the days of the lay-by? The way people used to buy something they couldn’t afford right away? Many of you wouldn’t! These days we go for instant gratification and reach for the credit card. But is that the smartest way to pay for a big ticket item?

If you have a big ticket item in mind to buy but don’t have the funds at the moment, here is a summary of your options and what they mean for you:

  1. Set up budget and start putting money aside for your purchase
  2. This is a smart way to do it! You can set up a separate savings account, add to it regularly and watch it grow towards your goal!

  3. Put it on the credit card
  4. Keep in mind that you could be accruing from 15% or more interest and taking many years to pay it off

  5. Take out a personal loan
  6. Both of these options will get you your item right now but will cost you a lot in interest and could take years to pay off. Your big ticket item could end up costing you a lot more than what it is worth.

    An unexpected windfall?

  7. Pay for it with an inheritance, or
  8. Win big at the races! Derby Day and Melbourne are just days away! 🙂
  9. What about utilising your home loan?

  10. Use your redraw facility if you have one
  11. Use your offset account
  12. Use the existing equity in your home (set up a redraw or split loan facility)
  13. or

  14. Refinance all of your debt and your home loan to include the cost of the big ticket item.

Advantages of utilising your home loan

Likely to give you the lowest interest rate available as the item is secured against your home. Interest rates are at a historic low, it is the cheapest way of buying money today.

If you fail to make additional payments over a short period of time to cover the additional amount you risk taking longer to pay off your home and can even pay a lot more than the original cost of the item.

If you take a very long time to pay off the debt, you are increasing the total interest repaid – thus the total amount of the big ticket purchase. It could end up costing you a lot more than you really wanted to spend.

Regardless of the item you want to purchase, we always recommend you do two things:

  1. Come and talk to us before you sign anything. We may have some finance options you haven’t yet considered.
  2. Ensure you review your budget to maximise repayments and minimise the total cost of any money borrowed.

Call the office for our ‘winning tips’ and ideas on purchasing your next BIG ITEM – Contact us today.

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