While a simple refinance is an important component in ensuring your position is moving forward as efficiently as possible, portfolio products such as the Debt Depletion Portfolio Product from Inception Finance are radically improving portfolio performance for those paying attention.
The Debt Depletion Portfolio Product allows borrowers to obtain a lower home loan rate, through a customer loyalty rebate, by consolidating their owner-occupier home loan and investment loans under the same facility.
The facility provides broad rate efficiencies to be achieved across both owner-occupier and investment securities which has the capability to allow borrowers the ability to pay off their own home loan while not requiring properties to be cross collateralised which means that borrowers can change the makeup of the facility dependent upon their circumstances.
In this case, a couple, both Registered Nurses and in their mid fifties the DDPP was able to provide substantial improvements in their ability to reduce the debt on their owner-occupier property, reducing their payments from $1364.52 per month down to $1081.49 with all $205,000 loaned at 2 per cent (2.12% comparison rate).
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Above and beyond the reduced repayments for the owner-occupier property comes the tax savings, which create a substantial advantage in overall portfolio performance, in this case per annum the amount saved in taxes was $14,712.
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The ATO has ruled that the regulatory window will stay open on these types of products until 30 June 2020, meaning savings will remain available for those quick enough to setup the structure before 30 June 2020.
With the aim of reducing the debt on the owner-occupier property as quickly as possible, by redirecting these tax and interest savings back toward the home loan it is shown that the owner-occupier loan would be paid out nearly eight years sooner (based on the St George’s Extra Repayment Calculator) and leaving a total of $88,242.85 saved.
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