Have you heard of something called "
Transactional Loan"?
This is something that again - the banks never tell you..
You can use this method to get the best loan deal that enable you to pay off your home loan sooner with minimal interest accrued.
Compare this with the normal Non-Transactional Loan...are you familiar with this scenario?
- Interest is calculated on the daily loan balance and charged monthly in arrears;
- Restriction apply to the transactional capability of thr loan so that transaction limitations and/or transaction fees act to prevent the loan from being practically and reasonably used as a primary transactional account...
With Transactional Loan -
Interest Minimisation Strategy can be explained in these 5 easy steps:
Step 1
Transactional Loans have a credit limit, which may be either fixed or the amortisation schedule of the loan term
Step 2
By directly depositing your income into a Tansactional Loan, the loan balance is immeditaly reduced and as interest is calculated daily on the loan balance, interest payable is reduced.
So - if you have paid all your income into your loan, you will have paid a lot off your loan in a short time and saved a lot of interest, but how do you live?
Step 3
With every possible living expense you use a credit card.
You have bought your groceries from the supermarket, paid with your credit card, you are eating your nch, but you have not even paid for it yet.
The card provider just gave you an "interest-free lunch"....
Step 4
The amount owing on your credit is then paid off on the due date from your Transactional Loan, in which case there is no interest payable on the card whatsoever.
How you win?
First - you win by using the credit card without having to pay any interest for the privilege ;
Second - because the "Lunch Money" remains parked in your Transactional Loan account ledger, you save interest on a day-to-day basis.
Step 5
Most people keep ineffective transactional deposit accounts, but these become obsolete when you use a Transactional Loan, because now you are saving interest at a Transactional Loan rate...
You also retain the security of your savings. You can redraw up to your Credit Limit with access to cash from your Transactional Loan account. You may also transact from your Transactional Loan using ATM and Internet (and cheque and/or telephone - optional)
