• Making the most of a cash windfall

    Making the most of a cash windfall

    If you’ve come into a bit of spare cash (like your tax refund or bonus at work) the temptation to spend on an overseas holiday or brand new television may take top priority.

    Just a moment: Rather than buying on impulse and spending that windfall, you might consider using it to pay off existing debts.

    While this may sound like the ‘boring’ option, a simple deposit (or extra repayment) now could save thousands of dollars down the track on a home loan.

    Doing the sums

    Depositing a $3,000 windfall as a lump sum into an average $300,000 mortgage with a typical standard variable interest rate of 5.50% p.a. in the first year, could reduce a 30-year-term by 9 months and save almost $11,500 over the life of the loan. This assumes that lump sum is not redrawn during the term of the loan.

    Just one payment can make that much difference. 

    A similar deposit like this every year at tax time (for example), which is not subsequently redrawn, will significantly reduce the total cost, and length, of any home loan.

    Saving for a deposit need not be taxing

    And for first-home buyers (FHB), a tax return can also be used toward making a deposit. Tax refunds are considered genuine savings, and can go a long way toward the deposit required to buy a new home, and may be able to significantly bring forward the potential purchase date for your first home.

    Like to know more?

    Sound decision-making now can lead to great reward later in the life of your existing or potential loan

    So whether buying for the first time or looking to reduce the cost of a loan long-term, foregoing that short-term indulgence can turn a cash windfall – like a bonus at work or tax refund – into a sound cost-saving opportunity.

    Talk to a RAMS Home Loan Expert today for more information.

    The information here is of a general nature only and is not intended to constitute financial or tax advice. You should consult your professional advisor for advice specific to your personal circumstances.  Fees, conditions, limitations and lending criteria apply. 

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    About the author

    • Raymond

      Raymond A Ram is the RAMbassador for RAMS Financial Group. Raymond works with the RAMS team to bring simple, helpful and expert information on home loans and savings accounts to life with his down to earth and cheeky personality. He enjoys seeing everyday Australians turn their dreams of saving for a goal or getting into a home a reality. 

      Growing up in Goulburn, NSW, Raymond was brought up with good old-fashioned Aussie values of hard work and a fair go. It soon became apparent that Raymond wasn't content for the conventional path of grazing, producing the very best wool, and finding a nice sheep to settle down with. So it wasn't long before his passion for performing and his talent as a likeable larrikin shone through - landing him a few roles such as 'RAMlet'. He was even tipped to play RAM-bo at one point but chose to become star of the small screen instead as RAMbassador for RAMS. He now finds this role so much more rewarding.

      Contact your local RAMS Home Loan Centre about your home loan options.

      Raymond A Ram

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  • Disclaimer:

    This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness of the information to your own circumstances and, if necessary, seek appropriate professional advice.