| Gathering a deposit together to purchase a home is a | | | | find you maybe able to pay the few dollars extra a |
| much bigger challenge for lower income earners since | | | | week to reduce the term and put that 5 years of time |
| the recent Sub-Prime fallout. | | | | and money saved into your own home and not into |
| Lenders have been forced to take a more | | | | the bank vaults! |
| conservative approach to loan applications and | | | | You really need to be able to understand and master |
| therefore housing sales and house prices have both | | | | this part of the process, because this is where your |
| dropped significantly. All is not lost though, as eventual | | | | future financial freedom is stored. This is one of the big |
| home ownership for anyone who is prepared to work | | | | secrets the banks continue to hide from you. For an |
| for it, is still available with sensible and safer borrowing | | | | example, imagine if everyone paid out their loans in 25 |
| criteria in place. | | | | years instead of 30 years. Can you imagine how |
| A basic guideline of how to gather a deposit has | | | | much money would be saved? Have you done the |
| already been covered in Article 8 of this 24 part | | | | math yet? |
| Series. | | | | Just quickly, before we finish this article, here is an |
| In this article I will go on from there, assuming you now | | | | rough example of a 30 year and a 25 year home loan |
| have your first home, unit or flat. | | | | with just the 5 year amount in savings shown. The |
| This whole Series, "Retire Early As An Escapee from | | | | loan repayments are $2,000 a month for the 30 year |
| The Rat Race" is geared towards showing how | | | | loan. Due to variables in interest rates, I will just show |
| owning a home should be the single most important | | | | the general idea only. |
| decision in your financial life. This vital information is so | | | | Once you understand this and use it, I can almost |
| important to everyone, it is a shame it is not taught as | | | | guarantee you will be so empowered you will wonder |
| a compulsory subject at school. | | | | why everyone does not know and use this shocking |
| The Series will provide one or two Golden Nuggets in | | | | information. |
| each of the 24 Articles, as a subject this large | | | | Amount paid over the final 5 years of the loan at |
| obviously can not be covered in a 600 word article! | | | | $2,000 a month is $120,000! Are you shocked? |
| - How can a home buy me everything I want in life | | | | The tiny amount extra for the 25 year loan you would |
| and provide me with a comfortable life as I head into | | | | have to pay to achieve this is no where near $120,000, |
| old age? | | | | I can assure you. This is an exercise you must do |
| - Why not buy what I want now? | | | | yourself to calculate the savings. |
| - I can always get a home later, can't I? | | | | Golden Nuggets to take away from this 9th article in |
| We all have thought with this logic at one stage or | | | | the Series of 24 are: |
| another. This is the root cause for almost 40% of the | | | | - Check the default settings in your online loan |
| population to be renting their homes instead of owning. | | | | calculator and change the settings to just 5 years |
| Figures stated do vary from year to year and are only | | | | shorter and be surprised at the resultant repayment |
| used as a rough guide. | | | | savings. |
| Now we have our home, what happens next? | | | | - Change the repayment settings to add an extra |
| The aim is to plan ahead 20 or more years and do | | | | repayment amount of $100 a month for both the 25 |
| some math on your lenders online calculators. By | | | | years and 30 year loans and note the huge difference |
| default, most calculators in Australia, are set at the | | | | in figures. |
| maximum loan period. It's a sneaky trick they play on | | | | This exercise and the resultant savings if applied, is the |
| the uninformed. So check and note the difference | | | | secret of how you can learn to Escape The Rat |
| between the loan repayments for a 30 year loan as | | | | Race...but you must apply it for it to become effective |
| compared to a 25 year loan. You will be shocked to | | | | in your life. |