Q&A - Empty pockets


Q. I took over a mortgage in 2001 and increased it to purchase a vehicle in 2003, and so find myself at 56 with no funds with which to maintain my 20-year-old property. I have a few thousand dollars in my redraw facility. Should I pay interest-only and change to a line of credit?

I have enough super upon retirement to pay out my mortgage.


A. I suggest you see a qualified financial planner to get some expert advice on your situation.


I’d hesitate going for a line of credit as the interest rates are often a lot higher, and technically you never have to pay it down, so you maintain your debt instead of reducing it. A redraw facility is often the cheapest of the loans, just make sure you don’t use your redraw facility too often.


To reduce your loan payments, you have a couple of options. The first is to refinance the loan to a new term (the longer the term, the smaller the repayment). You can also split your loan so that half is principal and interest, and the other half is interest-only. I’d discourage making the entire loan interest-only, as again you wouldn’t be reducing any of the debt. Finally, there’s a product known as a ‘reverse mortgage’ or ‘equity release’ loan, whereby the lender will lend you money on your property, but take an ownership in it, taking possession when you die or recouping funds if you sell.

Related: Home Loan Calculator


With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now

Top Suburbs : coburg north , goulburn , mayfield , spearwood , the basin

go back

Get help financing your investment

Do you need help finding the right loan for your investment?

When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.

Just fill in a few details below and we'll then arrange for a local expert Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus, our mortgage broking service is at no cost to you.

How soon would you like a mortgage?
What is your Annual Household Income i $
Do you currently own any Investment Properties?
Do you own your own residence?
How much equity do you have in all your current properties?
First Name
Last Name
Where do you live?
What number can we reach you on?
E-mail address
We value your privacy and treat all your information seriously - you can check out our privacy policy here