The one thing I wanted to talk about today is your super and potential withdrawal. Potentially refinancing instead. So you’ve got to think about it strategically. The share markets dropped, which means your balance in super, or the value has dropped, but you haven’t realized that value decrease because you haven’t sold anything. So it gives you a greater opportunity when the market rebounds and increases again that you actually grow your wealth more in super by keeping it in the super. Year on year the average returns are around 7% to 9% depending on what fund you have it invested in, whether it’s high growth to balanced. But I saw an Australian super came out recently and said their balance was averaging, over a 10 year period, 9% returns.
Now, so I do think if we use that example of the super and 9% returns of a growth balanced fund for a 10 year period, and the cost of refinancing is 2.5% to 3.5%, well it seems to stand out quite significantly, that the financial decision that we need to make is quite obvious. That we’re better off refinancing $20,000 if we can on our loan, compared to taking that $20,000 out of our superannuation and realizing the losses that we have in super. Because the cost to us of $20,000 being topped up onto our loan is negligible. We don’t even have to have that money used there. We can actually have our loan and then have two offset accounts. There are some products that would have multiple offset accounts. We do have day to day living in one, and this showed up that we have the 20K sitting there.
So, if we do have job losses in our family network and we can’t afford to pay our mortgage, we can do this. Because yes, you can talk to the bank about deferring you mortgage for six months, doesn’t mean the government will allow it. Whereas this will create a safety net for you. Not only that, if you do try to defer your mortgage, what I’ve been hearing is some banks are saying they’ll allow it, but they’re keeping your loan term the same and they’re going to increase the amount of repayments that you have to make in a shorter timeframe by six pounds. So there’s different strategies you can go down, but to me, the logic one is, take advantage of the low interest rates compared to drawing your money out of the super at 9%.