For sole traders and single business owners utilising your business banking within your home loan can help you pay off your mortgage 2-3 years earlier and save you a decent amount in bank fees as well.
I ran through this scenario with a client recently. He was on an annual income of approximately $50,000 but his business revenue was around $150,000 before costs. Even though there is around $100,000 of expenses that soaks up this revenue there is still a very good opportunity to utilize this income in the short term.
The income for the business is relatively consistently and comes in weekly so on average $2884 per week comes through the business accounts. The majority of costs are paid monthly and typically the month after. This means the revenue is able to sit within the business account for a number of weeks before expenses need to be paid.
If this business banking is incorporated within a person’s mortgage while this revenue is within the account it is offsetting a reasonable amount of interest. For this particular scenario having this use of money saved $65,000 in interest on his mortgage and paid it off 2 years and 9 months faster.
On top of this the mortgage account replaced the existing business banking so all those fees were able to be avoided going forward.