This should make me happy, so why am I fuming?

17.02.11 | Posted in General

I rarely get mad or angry, and if I do, it’s only for a really short time. One of the greatest compliments someone ever gave me was “If you were any more chilled out Em, you’d be asleep”. I like that. Life’s too short to be angry or mad. But today I saw the deepest shade of red for quite a few hours.

This afternoon I was told by my banker (after I asked) that by switching our mortgage repayments to fortnightly (instead of monthly) we’ll save $640 a month. I reckon an extra $640 per month could be useful to anyone, no matter how much you earn. I’m angry at myself for being so dumb and not thinking to ask earlier, and I’m angry at my bank too. I pay an annual fee to be a client of this private bank and my banker knows how hard I’ve been working to reduce the debt on this property.

Actually my friends would say I’ve been more than working hard. I’ve been a bit obsessed. Whenever I get even a spare $200, on to the mortgage it goes. Reducing that non-deductible debt (even if in the tiniest of amounts) means I can get closer to my goal of having a substantial investment property portfolio, giving my family a great life, and having the freedom that we all want.

My banker is well aware of how hard I’ve worked over the past twelve months to reduce this mortgage. Yet, at no time in the past year was it ever suggested to me that we go fortnightly instead of monthly. We would have saved at least $7,680 (but it would have been way more as the debt was a lot higher to begin with.)

I’m sharing this story here because:

1) Well, it’s just made me feel better. Thanks.

2) I’d like others not to have to go through the same experience. If you’ve got a mortgage, don’t be dumb like me and expect others (even those you’re paying) to have your best interests at heart. Call your bank first thing tomorrow and get your repayments switched to fortnightly.

3) Continually ask your banker (and your accountant) this question: “Is there a better way to do things?” or “Am I possibly doing everything within my power to reach my goals in the fastest way possible?”

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15 Comments

  1. sharon

    this is typical banks not telling their customers what they are entitled to. They spend more time luring in new customers, with better mortgage rates, than looking after the customers they do have.

    I was in a similar situation a couple of weeks ago. I spoke to the bank manager about re-financing or increasing our investment loan to ensure that we were capitalising on every possible cent we could. Well instead of re-writing a new loan, they advised I had a once-off, top-up opportunity of $50k written in to my original agreement. I signed 2 pieces of paperwork only and I had the money within 6 business days. Now why didn’t they tell me about this? This money will go a long way to leveraging my existing investment and allow me to buy another property.

    And something else I learnt in the past couple of months, every single mortgage is portable. That’s right. Sell a house and you should be able to keep the loan open until you find another. Just put in an extra 5-10% above the loan amount to keep it open. Why don’t they tell their ‘good customers’ this? Because they like pay out fees, re-finance fees and new loan establishment fees.

    Be savvy, find out all your options. 6 years of property investing and about 8 properties later and I am only just finding this out!

  2. Emma Treadgold

    Thanks for the great post Emma, I have heard a few people mention this idea to me but haven’t made the move to make it happen – having bought our first home last year, I will be asking about this next week!

  3. Ian Simpson

    Em, yes you can save money by paying fortnightly if you are paying principal and interest repayments plus if you are NOT using a 100% offset account.

    If you have an offset account and you accumulate your spare money in there then the savings quoted for paying fortnightly are simply not correct. The offset account makes the savings already.

    In the case of an investment property with interest only repayments paying fortnightly is irrelevant because the principal is not being paid down (and the extra cash should be directed at paying down your non-deductible home loan faster).

    If you have a very simple P&I loan with no offset account then yes fortnightly repayments save you $.

    I hope that makes sense :-)

    Ian Simpson

  4. Emma

    Hi Ian, thanks so much and yes I’m absolutely aware of this – all of my investment properties and past homes have been on fortnightly payments. I’m kicking myself because I have no idea why I didn’t do the same with this mortgage, and only realised twelve months into the game. I do also run an offset account. I’m just frustrated because I feel my banker should have picked this up, and again – so should have I! Thanks for your comment.

  5. Emma

    Good one Em!! I’m sure this change will more than cover your Business Chicks membership :) Have a great weekend!

  6. Amy

    Hi!

    Keep in mind that some banks also offer weekly repayments. I’m with St George bank, and have had weekly repayments since the very beginning – and on that note I’ll just say that I was fortunate as they told me up front that I had this option :)

    Hopefully your bank does too! I’ve also been knocking off my mortgage as best I can, reducing it by 10 years, after only having it for 14 months. It feels very rewarding!

    Thanks for the informative post! All the best,
    Amy

  7. Blair

    your banker sounds like an asshole.
    i would get a new banker. thank you for sharing this with us!!
    it has been posted to fb and hopefully other people will learn. x

  8. Emma

    Hi Blair. No my banker has generally been great – I think it was just a genuine oversight that happened, that has turned out to be costly. Since yesterday they’ve been in touch with me with the response: “Honestly this was not a malice action. I simply didn’t think of this option.” Just an expensive lesson to learn from, that’s all!

  9. Emma

    Hi Amy! Congrats on your success – sounds like you’re going great guns. And great news that your bank thought to bring the weekly repayments to your attention from the outset. Emma

  10. Geoff

    Hi Emma. Thank you for sharing your experience and I agree that banks could be more proactive. We are sometimes hard on ourselves at these times, however you did realize and have now moved into a better position – so well done! I agree that focussing on our goals is essential and if you feel I could assist your members with coaching support, feel free to contact me.
    Regards, Geoff
    The Success Coach

  11. Leanne

    My ‘see red’ issue with banks at the moment is exit fees. We are looking to exit from our current mortgage arrangements and are horrified at potential exit fees of almost $7,500.

    But we had a brainwave this week. We’re going to the bank that we want to switch to (we already have an investment property loan with them) and ask them to pay our exit fees if they want our current (and future) business.

    Let’s see how serious banks will be in securing new customers.

    Hope that repayment balance continues to drop Emma.

  12. Sean Finter

    Great point Em- since setting up here in the USA I have made a point of being VERY clear to all of my suppliers what MY expectations are of THEM. I tell them that issues such as failing to inform me of a better (lower cost) option would cause me to terminate our relationship. While some might view this as a awkward way to begin a relationship it has saved me a lot of heart ache, time and money.

    Keep fighting the good fight Mrs Isaacs!

  13. Kat

    Em, I’ve only just been fortunate enough to find your blog – and I totally get where you’re coming from in this post! You know this is more than just with banks it’s everything – it’s so easy to become complacent and not question things…

    by the way – “don’t be dumb like me” – seriously, you have a child, multiple businesses and are hell bent (by the sounds of it) on establishing a property portfolio – it was merely an oversight and hey – I don’t think you’re dumb I think it makes you smart – you found it pretty early, so now look at how much difference that’ll make in the BIG SCHEME of thing’s! FYI the lesson? NEVER RELY ON BANKS lmao xx

  14. Emma

    Thanks Kat for your lovely comments! All the best for a great weekend ahead, Em x

  15. Jen

    Hi,
    First time blogger. Given you are so disciplined this may work if your not already across it. Pay yours and your husbands full pay onto the loan. Use credit card for all payments and then draw off the loan the credit card amount before interest is due. There are loans that do this but you can also set it up your self. It only works if you keep to a budget and pay before your credit card interest is due….as I said your probably across this but another way to make a dent using the “banks” for you ….jen