Ok admit it, none of us are keen on those friends or family that you invite around for nibbles and they double dip the yummy kiwi icon, reduced cream dip.  Not cool!  However there is one occasion where, using my own analogy, that I say double dipping is a good idea, and that is when you want to pay extra off your home loan.

Helping a client to become debt free quicker is my aim, and one way of doing that is by letting them know it is ok to double dip.  A recent example of this, working with one of my clients who had an additional $100 that they could put towards paying down their home loan debt.  We talked about paying $50 extra per month on to their fixed loan, as a requested fixed payment and $50 deposited in to their transactional account.  The $50 on the fixed loan would come straight off the principal and this meant that money couldn’t be touched.  The $50 in the transactional account would save them on interest however it is still available to be drawn on in case of an emergency.

By doing this, it gives our clients certainty that they are paying extra straight off the principal amount and reassurance that the other $50 is there working for them but if required, they can access the funds in case of emergencies that we all know crop up when we least expect them, but by leaving it in the account it is still saving them in interest payments.  By doing the above scenario, based on a 30 year term, $350,000 home loan, it would save our client $55k in interest payments.  A win win situation and a nice outcome to a double dipping scenario!

The information contained in this article is of a general nature and should not be taken as advice. It reflects the opinions of the writer only and does not necessarily reflect the opinions of New Zealand Home Loans.