In episode 5 of Inside a Financial Plan, the team explored the balance between paying down debt and investing in property, using Dion and Rachel’s financial plan as a real-life example. The discussion uncovered how strategic mortgage structures and a clear focus on long-term goals can help build financial freedom - without unnecessary complexity.
The Power of an Offset Facility
When it comes to smart mortgage strategies, Dion and Rachel’s approach to their offset facility stood out. Over time, they built a $100,000 buffer that now fully offsets part of their mortgage, reducing interest costs while acting as both a savings and emergency fund.
Unlike revolving credit, an offset facility encourages saving rather than dipping into an overdraft. As Mike explains, “there’s something different about the psyche of saving your money versus having a large overdraft.” For Dion and Rachel, it’s been a tool to fund renovations, car replacements, and even a new roof – without adding more debt.
Paying Down Debt vs. Property Investment
The episode’s core question – paying down debt vs. investing in property – came to life through Dion and Rachel’s goals. Their priority is clear: pay off the mortgage and truly own their home. Mike notes that this approach is often underrated in a world obsessed with growth at all costs. “Sometimes it’s not about swinging for the fences,” he says, “but about making sensible decisions that keep you on track.”
While the couple could use their equity to buy another investment property, Rachel was quick to point out the mental and financial strain that comes with it. “I just don’t want another thing to be thinking about,” she says – a reminder that wealth building isn’t just about numbers; it’s about peace of mind.
Exploring Commercial Property and Risk
Mike introduces a new idea – commercial property – as a potential middle ground. It offers steady income with less hands-on management, aligning with their desire for passive investment. However, he’s clear that it comes with barriers to entry: larger deposits, tenant risk, and market unfamiliarity.
For investors considering this path, Mike highlights that quality is key. A well-located, multi-tenant property with a “net lease” can provide consistent cashflow and even serve as an intergenerational asset, generating income long after the mortgage is gone.
Keeping Mortgage Strategies Simple
Not every financial strategy needs to be complex. Mike reminds listeners that smart mortgage strategies are often the simplest ones – like using savings to pay down a fixed loan, then rebuilding the offset over six months. For Dion and Rachel, that means paying off smaller chunks regularly while keeping flexibility for emergencies or travel.
He advises against unnecessary refinancing or overcomplicated credit card tactics, pointing out that simplicity is easier to stick to long-term. “If it’s worked, if it’s not broken – don’t fix it,” he says.
Key Takeaways
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An offset facility can double as a savings buffer and an interest-reduction tool.
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Paying down debt offers peace of mind and long-term security, not just short-term gain.
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Commercial property can provide stable, passive income – but it requires a higher upfront investment.
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Refinancing doesn’t always pay off; weigh the costs carefully before switching banks.
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The smartest mortgage strategies are often the simplest and easiest to maintain.
Next Steps
Looking to optimise your own mortgage strategy? Speak with the Lighthouse Financial mortgage team to build a plan that aligns with your goals and lifestyle.
This series is proudly sponsored by PocketSmith, the smart budgeting software that helps you see your money clearly. With live bank feeds, automated categorisation, and powerful forecasting, PocketSmith gives you the full picture of where your money’s going – and where it could take you.
At Lighthouse Financial, we use PocketSmith with many of our clients because it connects your day-to-day spending to your long-term goals. Unlike a spreadsheet, it can’t be fudged – real data means real progress. Whether you’re managing a household budget or planning for financial freedom, PocketSmith helps turn your plan into action.
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If you’d like to learn more, check out these other episodes below.
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Disclaimer:
The information in this article is general information only, is provided free of charge and does not constitute professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
