I'm a financial idiot - what should i do?

[323Turbo]

ok,
thinking of buying a 2013 xr6t, but i hate loan paperwork & I hate taking $ out of home mortgage redraw

should I just pull the 19k out of mortgage redraw (I owe 400k at, I dont know ~5%) & increase my payments or should I go thru the hassell of a loan 7%?

surely taking it ouf redraw is the smart option or is it?

or i could take $9k out of redraw (i wouldnt miss it) and get a small loan of 11k over 3 years at 7% - interest on that would be stuff all - but I'm not sure if icbf - i hate loan paperwork!!

[Raptor]

Originally Posted by 323Turbo

...thinking of buying a 2013 xr6t...

There's your mistake right there
Thinking of buying a near new car, you can't afford it.

But if you don't like that answer;

Work out what the repayments would be on the 7% loan over at most 5 years, preferably less.
Then redraw it all from the mortgage but increase your repayments by the amount above.

Or conclude you can't afford it.




.

[Ross 1]

The way the interest is structured on mortgages you will end up paying more in interest than if you do a 5yr loan. Your best option, if you conclude you want to go ahead is save at least a 30% cash deposit. It puts you in a better bargaining position on the loan rate and can bring the term and interest right down.

[323Turbo]

Originally Posted by Ross 1

The way the interest is structured on mortgages you will end up paying more in interest than if you do a 5yr loan. Your best option, if you conclude you want to go ahead is save at least a 30% cash deposit. It puts you in a better bargaining position on the loan rate and can bring the term and interest right down.

why would i want to save a cash deposit when all my spare cash goes into redraw (currently at $80k-not heaps but the house is worth 900)

anyway, the 2013xr6t is 26k - nearly halved in value in 2 years, i have 8k to put towards it (cash sale of my 2nd car), so i need to find 18k

thanks Ross, you hit the nail on the head, just need to work out what to increase my mortgage payments by to cover it (bit I'm not sure on)

see, i told you i was a financial idiot

[NTF6]

Originally Posted by 323Turbo

why would i want to save a cash deposit when all my spare cash goes into redraw (currently at $80k-not heaps but the house is worth 900)

anyway, the 2013xr6t is 26k - nearly halved in value in 2 years, i have 8k to put towards it (cash sale of my 2nd car), so i need to find 18k

thanks Ross, you hit the nail on the head, just need to work out what to increase my mortgage payments by to cover it (bit I'm not sure on)

see, i told you i was a financial idiot

If you have 80k in redraw why are you considering a loan?

Use your redraw for the full purchase price of the car and put the equivalent of what the theoretical loan repayments would have been back into your redraw account and I hope that redraw account is linked to an offset account to save you interest?

[323Turbo]

Originally Posted by NTF6

If you have 80k in redraw why are you considering a loan?

Use your redraw for the full purchase price of the car and put the equivalent of what the theoretical loan repayments would have been back into your redraw account and I hope that redraw account is linked to an offset account to save you interest?

i know it sounds stupid, but i really wanted to get to that 100k mark, i think what I will do is just take 10 from redraw, save 9 (or just get that too lol) & sell my 2nd car for 7.
take me a year to pay back the 19.
cheers

[Elks]

Originally Posted by Raptor

Work out what the repayments would be on the 7% loan over at most 5 years, preferably less.
Then redraw it all from the mortgage but increase your repayments by the amount above.
.

There is your answer right there. It takes some dicipline, but if you can't do that you should sit on your hands.

There is real advantage to owning the vehicle unencombered is you can sell it at anytime.

The worst thing you can do is pretend you own it until you have paid off the extra $19k. Because if you don't you will have paid about double that over 30 years.

[323Turbo]

Originally Posted by Elks

There is your answer right there. It takes some dicipline, but if you can't do that you should sit on your hands.

There is real advantage to owning the vehicle unencombered is you can sell it at anytime.

The worst thing you can do is pretend you own it until you have paid off the extra $19k. Because if you don't you will have paid about double that over 30 years.

i need to get my head around some mortgage calculators and try to work this out.

thanks

[Yellow_Festiva]

Originally Posted by 323Turbo

i need to get my head around some mortgage calculators and try to work this out.

thanks

There is really nothing to work out.

* Redraw gives you more buying freedom.
* It gives you a great rate that often can't be matched.
* It gives you greater buying power.
* It allows your car to be purchased outright.
* If you are buying with your own redraw than you are essentially spending you own savings - that just happen to be in your loan.
* You won't need to apply for extra credit.
* You won't need to pay extra monthly fees.

etc etc etc etc.

The only issue is if you drag out the repayments... which hopefully you won't.

[mr_xlr8]

Originally Posted by Yellow_Festiva

There is really nothing to work out.

* Redraw gives you more buying freedom.
* It gives you a great rate that often can't be matched.
* It gives you greater buying power.
* It allows your car to be purchased outright.
* If you are buying with your own redraw than you are essentially spending you own savings - that just happen to be in your loan.
* You won't need to apply for extra credit.
* You won't need to pay extra monthly fees.

etc etc etc etc.

The only issue is if you drag out the repayments... which hopefully you won't.

there sure is a bunch of ******* on here...mate if your not keen on paperwork etc then i suggest a broker, a good one is a blessing to know.
, try your local smartline franchisee, this will get it sorted via mortgage or redraw they can do you a better rate than any caryard.
XR6T is alot of fun and if your hearts set on one then why not go and do something for yourself, good luck.

[Smoke Pursuit]

Originally Posted by Raptor

There's your mistake right there
Thinking of buying a near new car, you can't afford it.

But if you don't like that answer;

Work out what the repayments would be on the 7% loan over at most 5 years, preferably less.
Then redraw it all from the mortgage but increase your repayments by the amount above.

Or conclude you can't afford it.




.

Where does he say he can't afford it?? Lol

[usernametaken]

Mate, you owe 400k on your house.

That's a lot of money.

How secure is my job - that's the first question I'd be asking myself.

[323Turbo]

Originally Posted by usernametaken

Mate, you owe 400k on your house.

That's a lot of money.

How secure is my job - that's the first question I'd be asking myself.

its worth 900 so i think im ok

[usernametaken]

Originally Posted by 323Turbo

its worth 900 so i think im ok

Get a Lambo then.

;-)

[323Turbo]

Originally Posted by usernametaken

Get a Lambo then.

;-)

luckily my wife is the sensible one, otherwise i would love a f355 LOL

[greens_tuf]

Originally Posted by usernametaken

Mate, you owe 400k on your house.

That's a lot of money.

How secure is my job - that's the first question I'd be asking myself.

Is it really? What does 400K buy you these days? It don't even buy you 200K...
I would say that most people/couples under 35 would be looking at a loan of that size if they want to buy a house (in Sydney).
I'm in the same situation, although I need to buy a family car not a toy.
I would use the redraw and pay it back as soon as possible (although that advice is NOT based on calculations, just opinion)

[Ben73]

Originally Posted by usernametaken

Mate, you owe 400k on your house.

That's a lot of money.

How secure is my job - that's the first question I'd be asking myself.

A lot of money? Well that depends on his personal situation. If his household income is 200k a year, 400k is not heaps. If his household income is 50k a year, then yes it is a lot.
Job security is an important one though. I wouldn't finance anything if I had a slight suspicion I would be jobless in the near future. Surely most people think like that. Especially people who already have a mortgage. I did notice I became a lot more financially responsible after getting a mortgage

[sbutler]

Your redraw is without doubt the best way to buy anything. You have a redraw because you have been pumping money into your house. Your house will always appreciate in value, so in effect your house is paying for your car. Just buy the car, & throw some extra cash into your redraw weekly, & you'll be back to scratch in no time
Oh & its your money your using not a finance co..

[Yellow_Festiva]

Originally Posted by sbutler

Your redraw is without doubt the best way to buy anything. You have a redraw because you have been pumping money into your house. Your house will always appreciate in value, so in effect your house is paying for your car. Just buy the car, & throw some extra cash into your redraw weekly, & you'll be back to scratch in no time
Oh & its your money your using not a finance co..

What I would say to the letter.

All my spare cash goes into my loan - I never have more than $10 in my account.

Times comes to buy something big like a car - redraw. It is my own money that I put in there in the first place after all. And at an attractive interest rate at generally well below 5%.

[usernametaken]

Originally Posted by sbutler

Your house will always appreciate in value..

I get scared when I read posts like this...

[sbutler]

Originally Posted by usernametaken

I get scared when I read posts like this...

Why, I had 5 at one stage, never lost a cent on any of them, Made money on the two I sold & the tenets help pay the payments. So I now only have 3 houses & will be selling 2 at over double what I paid 7 years ago. & will be thinking of taking an early retirement.
So what scares you??

[usernametaken]

Originally Posted by sbutler

Why, I had 5 at one stage, never lost a cent on any of them, Made money on the two I sold & the tenets help pay the payments. So I now only have 3 houses & will be selling 2 at over double what I paid 7 years ago. & will be thinking of taking an early retirement.
So what scares you??

Um..... because house prices will not always go up.

You were lucky.

[richo77]

Originally Posted by usernametaken

Um..... because house prices will not always go up.

You were lucky.

Long term property prices have increased since Moses wore short pants. There will always be ups and downs in the market but long term have always been positive.

[sbutler]

Originally Posted by usernametaken

Um..... because house prices will not always go up.

You were lucky.

Your kidding right? House prices always go up. Yes they can stumble at times, but they never go down, unless they were worthless in the first place & you bought next to a coal mine or something. How many times in your life have you heard I could have bought that 5 years ago for only XXX & now its worth double that?.
Ever heard the saying "Invest in bricks & morter" Nothing has changed. Just some people take a few risks in life & some take no risks.

[Smoke Pursuit]

$19k at 5% on the mortgage is aprox $80 per month interest. If you go the mortgage Route just be disciplined and pay it off over like 2 years.

[ford man xf]

323Turbo I don't think your a financial idiot, considering you have made all those extra repayments on your mortage that's a smart move.

I have redraw funds available on my mortage as well, but I would only ever use it as a last resort on something, its just not worth using it as it's only going to add more woes to your mortage especially in the long run.

Maybe try and save as much as you can for a year and then see where you are at, you might even change your mind on what car you want in that process.
Don't get yourself further in debt than you have too. A house is the only thing you should ever have take a loan out for...

[323Turbo]

Originally Posted by ford man xf

323Turbo I don't think your a financial idiot, considering you have made all those extra repayments on your mortage that's a smart move.

I have redraw funds available on my mortage as well, but I would only ever use it as a last resort on something, its just not worth using it as it's only going to add more woes to your mortage especially in the long run.

Maybe try and save as much as you can for a year and then see where you are at, you might even change your mind on what car you want in that process.
Don't get yourself further in debt than you have too. A house is the only thing you should ever have take a loan out for...

i am though, i dont really understand it all properly.
yes i have tried to save as much as i could for years & years, but i benefited from the perth property boom from 2005, but thats it - never won lotto or had any windfalls given to me (well i sold my AMP shares the day after they listed & that paid for a $5k shed lol)


yes, i'm like you i want to keep the redraw in the bank, but i dont want to wait for a year for a fun car

such a dilema my car obsession, i think i have an illness...

[323Turbo]

thats the crux of it, at what point will I be dragging out the repayment/paying more than i should.
this is where i need to find a idiots redraw/loan calculator :-)

cheers

[Yellow_Festiva]

Originally Posted by 323Turbo

thats the crux of it, at what point will I be dragging out the repayment/paying more than i should.
this is where i need to find a idiots redraw/loan calculator :-)

cheers

Again - if you're toying with the idea if a car loan at 7% as per your original post than paying 5% means your actual repayments will be lower anyway.

If you want, use the calculator to work out the difference in your repayments after you redraw.

Smoke Persuit gave some rough numbers further up. If you're on a variable loan you can call your bank and negotiate a lower rate - even the 'Big 4' will do between 4.6 and 4.8% if you push.

Then, just work out what extra you will pay with the lower balance in your loan and divide it by weeks / months whatever.

How much you want to expose yourself financially is a personal decision.

[ford man xf]

Send a PM to Peter, his username is Peter B - CV8
He's in the loan industry and has given me some excellent advice on home loans, I'm sure he won't mind answering a couple of questions in relation to your dilemma.