How did you build wealth with a big mortgage and a baby on the way?

C

CrackTadpole

New Member
Hi guys. Just after a bit of an opinion from anyone who’s been in a similar situation.

Myself and mrs (mid 30s), both on around 100k each. Mortgage owing around 570k. Value approx 1.35–1.45mil. Savings around 71k. No debts besides the mortgage. Cars owned outright. No offset or anything set up, except a redraw on the loan holding 43k of the 71k savings. No investments.

First child on the way.

If anyone has been in a similar situation and made the move s to set yourself beyond this, what pathway did you take? Property investing? Focus on paying off the loan? Other investments? Or start with an offset linked to the mortgage and redirect all pay/bills in and out of there?

Genuinely curious. I see a lot of opinions and strategies from brokers/planners. But I wanted firsthand experience or advice on what they did to move towards financial freedom and wealth creation.

Always been intrigued about property investing. But I admit I get nervous with the “what if” in a negative sense.

Any advice or firsthand experience appreciated. Cheers!
 
Honestly, you’ve got an expensive 5 years coming up.
Childcare
reduced spouse income
needing a bigger car and house if more kids are coming

I’d buckle down. Any extra to offset.
I’d take on any extra risk once kids hit school age.
 
For most people in your situation, offset accounts give less than zero savings compared with dumping savings into the loan and redrawing if you’re desperate. Offsets are designed to pres erve the tax deductibility of investment loans, or loans that could become investments in the future. For example, if you upgrade and keep your first home as an investment. Using them for cashflow undoes a lot of people, because instant access to all their savings leads to more spending.

It’s worth considering using some of your equity for an investment property, but you’d need to talk to a good broker to make sure it stays affordable for you as things change.

In the meantime, double check that your loan has electronic redraw, then dump all your savings and as much of your income as you can into the loan. Keep holiday savings separate to avoid the risk of over dipping when you go away. There’s a lot of bullshit online about offsets from people trying to look clever, without having calculated the savings difference of using them for everything and without looking into what really happens over time. To be honest, I made the same mistakes in my first few years as a broker too, but I’ve seen too many people fail to realise the savings to ever recommend them for anything other than what they were designed for: tax planning.
 
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