Investors need to take more control of their finances and their approach, according to CEO of Crown Lending, Scott Parry.
During the boom years, there was a heavy culture of debt and borrowing that characterised investing, said Mr Parry. However, in today’s market investors should be considering taking more control of their finances and debt levels.
In fact, “It has always been the great Australian dream to own your own home but many people struggle to pay off their loan and end up in debt for 30 years or more,” he said.
“Instead of chipping away at a home loan for several decades, the trick to getting out of debt comes down to discipline, creating a smart money management plan and making sure you stick to it. Getting your income working for you and not the banks is the key to debt reduction.”
Mr Parry warns that this is especially important as we enter into an environment of lower interest rates where investors may be tempted to ease up their repayments.
”Rather than borrowing more, homeowners should take this opportunity to increase their repayments or make additional repayments on their loan. These simple steps can shave years off the loan term and save thousands in interest,” he said.
Among his suggestions for taking control of debt included automating your income so that it is paid into your loan from your payroll officer.
For investors he suggested several tips to Smart Property Investment for investors looking to get ahead in the current market:
- Getting an early tax variation form done so regular pay includes repayments investors would normally get at the end of the year, "Make your money work for you".
- Watch not just interest rates but also "sentiment and confidence," which are a key driver. "Rates are part of that confidence, but they’re not the be all and end all."
- "Debt reduction is the name of the game in 2013, pay down as fast as possible to build equity so when the time is right to attack the Australian market."