October 22, 2018

How does Loan Reducer work


When you take out home and investment loans, Loan Reducer combines the loan and maximises the tax-deductible portion of your liability, thereby maximising your savings.

Your savings are maximised with a floor rate on your home loan and a ceiling rate on your investment loan.

HOME LOAN FLOOR RATE: Reserve Bank Cash Rate plus 0.15%
Investment Loan Ceiling Rate: Reserve Bank Cash Rate plus 4.19%

You are paying your lender  the same amount as you ordinarily would for the combined loan. However, the floor and ceiling rates ensures that the investment loan takes the largest possible fraction of the sum. As investment property expenses are tax-deductible, this means you are effectively spending nothing on your investment loan whilst minimising your home loan, and thesefore your total expenses.

A win-win situation

How does the lender benefit by minimising my expenses?

Loan Reducer does not change how much you pay your lender because you save money by maximising your tax deductions. This means that your lender does not loose out on profit when you use Loan Reducer, but you still get to save.