31 March 2016 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.