by David Tillman
David Tillman is a banker turned labourer turned mortgage broker, and he brings his lifetime of dealing with mortgages to this book. He covers every aspect of first obtaining, then reducing a mortgage as quickly as possible.
The book covers all the known techniques of reducing the cost of a mortgage over its term – dealing with interest stress testing, revolving lines of credit, offset mortgages, splitting loans into fixed, revolving and floating portions, combinations of these ideas, and includes guidelines for deciding which is the right method for you. The book uses examples of typical couples to illustrate the various techniques of managing loans.
It covers such ideas as the “Latte mortgage” where the money spent on a daily cup of coffee is added to the monthly payments, showing how savings of tens of thousands of dollars of interest over the term of a loan can be made. If these topics seem too complicated then David advises seeing a mortgage broker to guide you through the options available to you.
This is a second edition of the book, and it now includes a very good section on using Kiwisaver to obtain a deposit and then get a loan. There would be few New Zealanders who are totally familiar with all the assistance available to them from Kiwisaver, and this alone is worth many times the cost of the book.
There are many tables and graphs showing the effects of increasing the monthly or weekly payments, and these make compelling motivation for following his recommendations.
Tillman’s section on stress testing a mortgage should be required reading for the many young people who do not seem to regard a mortgage as a debt, but just as a fact of life as they have no intention of paying it off, even regarding the increasing value of their property as spending money. This book points out the disaster that can follow such an attitude, if interest rates rise and house values fall even a little. He bases his projections on an interest rate of 6%, which seems historically low, so if rates rise above this then all sorts of problems arise.
He includes a section on his own story, telling how he obtained a loan and then paid it off in five years, despite being in a low paid job, but devoting all his energy to clearing the debt.
I think it is an excellent book, I liked the appearance of the text, and the layout of the chapters, but feel that more space could be devoted to the complex business of combo loans, because these can be tailored to an individual’s circumstances and they can offer the most savings, while still offering a reasonable lifestyle. Some of the stories, while making good points are a little simplistic and trite.
Overall, I think everyone thinking about borrowing, or even those with an existing loan should get a copy of this book.
Author: David Tillman
Publisher: Mortgage Freedom NZ Ltd