By Michelle Murchison
Our ability to use our language and vocabulary is integral in our ability to lead a successful life. Michelle Murchison explains.
The forefather of personal development, Earl Nightingale released the first non-musical LP about 50 years ago called The Strangest Secret, providing time proven strategies and wisdom of how we can create the prosperity in our lives that we desire. His key message is, 'We become what we think about'.
Earl proposes that the ability to use our language and extent of our vocabulary will, to a large extent determine our knowledge and therefore the foundation of our earning capacity. To this end, understanding financial vocabulary and terminology will provide us with the greatest opportunities toward the wealth creation we seek.
So while it's easy to get caught up with thinking that a cheap interest rate is the priority, a greater understanding of your short and longer-term needs is really the foundation towards your financial well-being.
It's important to realise that the right mortgage for you is not necessarily the one with the lowest interest rate. Over the past couple of years lenders have been competing heavily on interest rates. That would be fine, if all loan products were the same, comparing apples with apples if you like.
The simple fact is that no two loans are the same – even if they are from the same lender. And we are not talking just about the fees. Your mortgage is the largest financial commitment you are ever likely to make, so the steps should you take to build upon your financial vocabulary, is what will make the difference in understanding how to create your financial future…
1. Write down a list of all the changes to your cash flow you expect over the next five years.
2. Decide if you are planning on making minimum repayments or planning on paying off the mortgage as quickly as possible.
3. Work out how much you have in your bank account month to month.
4. What else are you saving for? A holiday or your children's education?
5. Seek financial advice. Yes this does cost money, however a small fee when you consider potential tax deductions.
6. Understand how sensitive you will be to upward rate movements.
7. What future borrowing requirements will you have, for example renovations, buying a new car.
8. Understand what level of flexibility you require.
With this information now laid out you are ready to tackle the advantages and disadvantages of different types of mortgage facilities.
Some generic examples are:
The key understanding is that a cheap rate can sometimes prove to be a more costly than a facility that suits you with a slightly higher rate.
It is up to you to realise that your mortgage is about what you need now and in the future not just about the rate. With this information in hand (and a mortgage finance professional by your side to explain how different mortgage products work in more detail) you can select the right product to suit you and still get a competitive rate along the way.
And meanwhile, the questions you've asked yourself will expand your vocabulary, understanding and confidence to create the life you want. After all, the secret is, 'we become what we think about'!
Michelle is the owner of Money Advantage, a company that arranges mortgage finance for clients who want to participate in their wealth building through property investment. Through years of experience, the Money Advantage team is teaching people to actively participate in their wealth creation by applying fundamental money strategies toward debt reduction & wealth creation.
