Opinion

You’ve finally paid off your home loan. Now what?

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August 03, 2017

You’re down to zero on your home loan? Congratulations! You’ve finally done what many people dream of. It’s now important to work out a smart plan for how to use the money that used to go to your lender. Reward yourself but then take a more long-term view.

Consider boosting your super to retire your way. By channelling the money that once paid off your home loan into your super, either by salary sacrificing from your pre-tax salary or paying with after-tax funds, you can give your super a decent lift.

Invest to build future wealth- if your super’s in good shape, you might like to use the surplus funds to build your wealth via other investments. If you prefer investments with a lower risk profile, savings accounts or term deposits could be the way to go.

But if you can invest for a five to ten-year timeframe, you might consider shares or managed funds. These can provide income in the form of dividend payments, plus the potential for capital growth.

Another option is buying an investment property. While the thought of taking on a new housing loan may be the furthest thing from your mind, the potential to cover repayments with the rental income could make it worth considering.

Work less, enjoy life more. Now that such a major financial commitment is no longer hanging over your head, you could consider taking a step back from work. Transition to Retirement (TTR) strategies can provide financial flexibility, allowing you to work less without reducing your take-home pay, by topping it up with a portion of your super taken as a pension. A minimum age applies for you to benefit from TTR strategies and they can be quite complex.

You can contact Alison Kable and staff at 254 Anstruther St., Echuca or by phone on 5482 2239 to assess your situation and help you understand the impact of each option to find the path that is right for you.

Alison Kable is a Certified Financial Planner and Authorised Representative of AMP Financial Planning Pty Ltd, AFS Licence no. 232706. This article contains general information only. It does not take into account your objectives, financial situation or needs. Please consider the appropriateness of the information in light of your personal circumstances.

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