Home loan repayments 'among the best uses for a windfall'

Thursday 07 July 2011

Article by Mozo

Aussies who unexpectedly come into a significant amount of cash have been urged to consider making a large one-off payment on their home loans.

Home loan repayments 'among the best uses for a windfall'

Greg Pride, financial planner for Centric Wealth, told the Sydney Morning Herald that this is particularly true for individuals in the higher income bracket.

"To generate an after-tax return of seven per cent you would need a ten to 12 per cent return elsewhere to beat knocking out the mortgage," he stated.

His comments were in tandem with those of AMP's Andrew Heaven, who is employed in the same role as Mr Pride.

The expert asserted that debts should be paid off before Aussies try to add to their savings account.

''You can't save and have debt at the same time," he claimed.

This comes after a study by business research leader CoreData revealed that one-quarter of Australians are in debt or dipping into their savings accounts to stay afloat financially.

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