CASE STUDY

Felix has saved a 10% deposit to buy a $500,000 home. He has done his sums and already knows that he will have surplus income of $350 per month once the mortgage is in force. In two years time he will receive a $30,000 lump sum from a maturing investment.

Felix could go to a mortgage broker, who would do the same sums as him and offer him a mortgage for $450,000 with a redraw facility and a cheque book.

At CPAM we take a far more detailed approach, looking at how your mortgage affects your financial situation as a whole. When Felix comes to see his Strategic Coordinator at CPAM he takes an entirely different approach – he structures the mortgage to fit Felix, rather than making Felix fit into a pre-existing product. He looks at the long term as well as the short – for example, if Felix makes fortnightly payments and puts his $350 of free income into the mortgage, that, combined with his upcoming $30,000 will enable him to reduce the mortgage to $400,000 in two and half years. The coordinator structures Felix’ loan to have $300,000 fixed due to the rising interest rate market, $100,000 variable, and $50,000 variable in a loan account. When Felix’ mortgage gets to $400,000 the $50,000 loan account can be redrawn and invested for income, giving Felix surplus income to make additional repayments to speed up the process of debt reduction.

Once the mortgage is structured, our in-house mortgage broker starts the process of finding the right mortgage, and once the $50,000 funds are available, the money goes to a manager in either the property or shares specialist companies.