You may have seen it on the television, heard about it on the radio or read about it in the newspaper. The term is mortgage minimisation. This is a strategy which helps you own your own home much, much faster than the traditional bank home loan.

Low interest rates and fortnightly or weekly repayments save some interest but they do not compare to the interest savings possible with this strategy.

For the smart property investor, this strategy maximises the tax effectiveness of your current loan structure and helps you generate equity quickly for your next property purchase.

Property investment companies across the country are using this strategy to help their clients build and grow their property portfolio, and now the technique is available to you.

Here is how it works...

A traditional loan is paid either monthly, fortnightly or weekly. The term of the loan can be reduced by paying fortnightly or weekly due to one extra monthly repayment on the loan per annum. The term is also reduced in this instance due to interest being calculated on a daily balance, and since the repayments are reaching the loan faster than once a month, the interest charged on the loan is less, and therefore your loan term is reduced.

A new loan product called the Line of Credit has now been introduced to the market. A line of credit is simply a home loan with a borrowing limit which can be re-used if you pay all or part of it off. In other words, it is like an overdraft or huge credit card with a home loan interest rate.

The Line of Credit can be arranged To purchase a new property, business or investment or simply refinance existing loans.

The Line of Credit is a facility where you can pay in as much as you like, and withdraw as much as you like (provided you do not exceed the line of credit limit). In other words, your money can come and go as your please.

Interest on the Line of Credit is calculated on a daily balance, therefore, if you have a lump sum or excess cash which can be parked in the loan, you will reduce both your interest and term of your loan.

This is great but it can be even more effective.
By placing all of your income into the Line of Credit, and placing your living expenses on a credit card (55 days interest free credit card) you can reduce the term of your loan dramatically.

The goods and services which you purchase at the beginning of each month are not really paid for until the end of that month.

Therefore, money has been sitting in your home loan, reducing your interest and reducing the term of your loan (After all, it's your money, why not use it to your advantage).

At the end of each month, an automatic transfer occurs from your Line of Credit to your credit card thereby ensuring that you never pay interest on your credit card.

Should you need cash, it can be withdrawn by cheque or ATM card directly from your line of credit as you would do with a normal bank account.

The above graph represents the effect of the Mortgage Minimisation Strategy. Remember that at any stage throughout the process, you have access to the equity in your Line of Credit.

Therefore at year seven, you could draw a cheque for $100,000 and buy another property outright, you will never have to apply for another loan again.