TruBlu - Case Study
What sets it apart from the rest...
John and Sue are self employed and have the following assets and liabilities:
| Asset |
Value |
Loan Amount |
| Home |
$700,000 |
$200,000 |
| Investment |
$350,000 |
$250,000 |
| Business Loan |
|
$200,000 (cash flow loan) |
| Share |
$200,000 |
$100,000 (margin loan) |
Their objective is to pay off their home loan as quickly as possible and to add to their investment portfolio.
An analysis of their current debt structure has revealed as follows:
| Loan Type |
Amount |
Interest Rate |
Monthly Repayment |
Remaining Term |
| Home Loan P&I |
$200,000 |
9.47% |
$2,085 |
180 months |
| Investment Loan (I&O) |
$250,000 |
9.47% |
$1,973 |
N/A (I&O) |
Business
Loan (I&O) |
$200,000 |
12.30% |
$2,050 |
N/A (I&O) |
| Margin Loan |
$100,000 |
10.50% |
$875 |
N/A (I&O) |
| Total |
$750,000 |
|
$6,983 |
|
If they do nothing more than refinance all of these loans into a TruBlu facility @ 9.00% p.a. they will reduce the remaining term of their home loan to 100 months instead of 180 months as is the present case. This assumes that they continue to pay $6,983 per month (their current total commitment) into the TruBlu facility. The reduction in the loan term represents savings of $166,800. The new debt structure will be:
| Loan Type |
Amount |
Interest Rate |
Monthly Repayment |
Remaining Term |
| Home Loan P&I |
$200,000 |
9.00% |
$2,858 |
100 months |
| Investment Loan (I&O) |
$250,000 |
9.00% |
$1,875 |
10 Yrs IO
15 Yrs P&I |
Business
Loan (I&O) |
$200,000 |
9.00% |
$1,500 |
10 Yrs IO
15 Yrs P&I |
| Share Loan |
$100,000 |
9.00% |
$750 |
10 Yrs IO
15 Yrs P&I |
| Total |
$750,000 |
|
$6,983 |
|
Adding a LinkLoan Mastercard with 0% interest (including cash advances) enables John and Sue to use the facility as their day to day transactional account for their cash needs, bill payment requirements and purchases.
The global redraw limit feature that is available with TruBlu empowers John and Sue to redraw available funds from appropriate loan accounts, thereby making it a powerful, tax advantageous wealth creation tool. As they reduce their home loan and create available redraw, the amount can be drawn from any variable rate loan account without the need to readjust limits. So, for example, excess monies paid into their home loan account can be redrawn from their share loan account to fund share purchases.
How does it work
The following diagram illustrates John and Sue’s proposed TruBlu facility.
NB. As all of the loan accounts are interest only and at a variable rate of interest, the aggregate (global) limit for redraw purposes is the total of all the individual account limits ($750,000). The available redraw is therefore the difference between $750,000 and the actual aggregate loan balances at any time.
|
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