Don’t get caught in the crossfire

We’re witnessing a war at the moment and it’s going to get worse as the hype builds and the public rush around the streets in a mad panic to find their safety. It’s not a terrorist attack nor is it a B-52 bomber raid – it’s an interest rate war between the banks. But you are at risk of getting caught in the crossfire.

Banks are competing to get your attention to secure your business. You will pay a significant amount of interest over the term of your home loan (on average three times the amount you borrow) so of course each bank wants you to choose them to pay all that money to.

The banks compete for your attention by distracting you with a sweet looking lolly that will make you feel like you got a good deal. But sweet tasting candy isn’t always good for you .

Here’s a saying you can install into your thinking to keep you on the right track with managing your home loan; “it’s not the rate you pay, it’s the rate you pay it off that counts.”

Make every effort to pay your loan off faster than the traditional, slow path that a normal home loan follows. There are a number of ways to do this, the simplest being to increase your regular payments above the minimum. I spoke with a friend the other day who asked me some questions about his mortgage and he told me they had paid off $23,000 in just over five years. That’s stunning progress!

The buoyant real estate market does not help the frenzied hype either, but you mustn’t let that distract you from your plans. The commentary provided by the real estate companies shouldn’t be seen as advice, but more like marketing messages to woo you into their office (or them into your lounge room!) Your best approach to making wise decisions in this type of market is a slow, well-researched assessment of the market. Remember, statistics tell the facts. Only when you have a solid base of data can you move safely. And yes, at that point you are prepared to move quickly if you need to, but never before. Those who jump before they look often get hurt.

Here’s the best advice I can give you to keep safe in this kind of financial environment. Firstly, don’t rush around in a mad panic like everyone else does. It’s those who rush between firing guns who get shot. The banks are firing shots at each other, not you!

Secondly, make a plan to achieve your goals. That means thinking about what is important to you and what you would like to achieve. Then your plan is driven by your personal motivation and not the silly hype of the market.

Finally, take your time to do your research so that you can take action steps based on facts.

Let’s not get taken out by a bullet intended for someone else!