powerhouse mortgages

[zenq]

A friend emailed me wanting advice:
"We need some advice, has anyone heard anything about PowerHouse Mortgages? They have brokers which show you how to cut YEARS off your home loan, but are they good or out to rip people off. "

From a quick look at their website they look like brokers who specialise in helping people consolidate or rapidly repay their debts, which is all fine. I've communicated this to them, and directed them to somersoft to learn a thing or two, but I didn't have any first hand experience or word of mouth, and wondered if anyone had any praise/horror stories.

Thanks
zenq

 

[Simon]

Often these guys charge a fee - sometimes $3000+ to show you what most brokers could do for you.

I would steer clear of them if they do charge a fee. Most regulars here could teach your friend how to use a LOC and a credit card to achieve the same effect.

Kindest regards,

 

[zenq]

fees

Thanks Simon, I suspected that too: on their web page they have a graph of "existing loan" and "their way": Their graph declines steadily to pay off total in 5-10 years, as opposed to 30 years with the existing loan, BUT their chart actually starts a touch higher: looks like a few grand worth.

 

[alexlee]

What can those guys show you that you can't find out for free on this forum and your local library? Paying off a loan faster isn't rocket science: just make more payments!
Alex

 

[Rolf Latham]

mortgage redn specialists

ta
rolf

 

[alexlee]

Just had a flick through the website. Looks like they'll charge you a fee upfront (quite a big one, if that amortisation graph is to scale!) and they work with you regarding budgets, etc to find how you can make more payments.

Cheaper option:
Get a piece of paper, write down everything you spend for a month, and review the list. Get a few books about how to save money from the library.

I don't see what sort of magic they can do that you can't do yourself. All the payments are still coming from your income, after all.
Alex

 

[Les]

Agreed !! But, hey - have them put the $3000 "fee" straight into their mortgage, THEN start reading, learning, etc. Just doing that will knock a year or two straight off the mortgage.

No, wait - have them set up an Offset Account against their Home Loan, and sock $3000 into that. THAT WAY, they're not tying up the money, but ARE offsetting the interest while they "read up" (if they leave it in there, it STILL knocks a year or two off the mortgage, even if they do nothing else).

Regards,

 

[alexlee]

Most of their clients probably can't save $3,000, and think that there's some magic wand out there that makes debts disappear.

I'm sure when the mortgage consultants talk to their clients, they stress how 'in reality, you don't have to pay us a cent out of your pocket for our fees'. Instead they just tack the fees onto their loan.
Alex

 

[redwing]

Isn't this similair to what Destiny Financial does as well with your property loans?

I think the cost was around $2,500 from memory (2-3 years ago)to do up a budget, set up the loans correctly etc

..LOC with a Credit Card, all wages go into the LOC and you live off the CC..then clear the CC slate each Month, meanwhile your wages have been keeping the loan reduced?

Personally I like the Offset Account Idea better, but thats just me

 

[alexlee]

That all sounds straightforward.

Zenq, may I suggest you show your friends this thread? I really don't think powerhouse can do much more than what we've said here, except hold your friends' hands in terms of working out a budget. A couple of k sounds expensive when you can do it for free with a few library books.
Alex

 

[Simon]

Isn't this similair to what Destiny Financial does as well with your property loans?

I think the cost was around $2,500 from memory (2-3 years ago)to do up a budget, set up the loans correctly etc

..LOC with a Credit Card, all wages go into the LOC and you live off the CC..then clear the CC slate each Month, meanwhile your wages have been keeping the loan reduced?

Personally I like the Offset Account Idea better, but thats just me

Looks like Redwing saved your mate $3000. Combine his advice with a budget and they have it solved.

 

[tubs]

I knew a company once that would do exactly what Powerhouse seem to be doing.
1. Set up a LOC on existing house
2. pay off car loans, credit cards etc
3. All pay goes into offset account to reduce principal on your hose
4. Use credit cards always, and pay them off from the offset account within 55 days, thus keeping your pay in the offset account for longer (reducing your principal)
5. Work on a budget so you can build up the amount in your offset.

They will charge you a hefty fee for setting this up, but if you follow the above steps you can do it for nothing!

Oh, and they also send one of their girls around to your house every month to check how many tim tams you've eaten and what its done to your budget.

And then they'll help you into an investment property (and I bet they know a developer who has a really great deal at the moment...)

Stay clear of people like this. They will do nothing for you that you can't do yourself (or that I could do if you paid me half of their fee ).

Tubs

 

[A Jackson]

My Question regarding an offset account is ....
Can you have Mortgage Payments come off your credit Card ?
So then ALL money for the month is on one credit card.
Cheers
AJ

 

[Simon]

My Question regarding an offset account is ....
Can you have Mortgage Payments come off your credit Card ?
So then ALL money for the month is on one credit card.
Cheers
AJ

You could but only via a cash advance. This has no interest free period and a higher interest rate.

You would be worse off by doing this.

Cheers,

 

[Peter 14.7]

Quick Comment that these LOAN REDUCATION !!!! guys thrive because of loans for rubbish like roof repairs (spray and spackle) at 27% p.a.!!!

My sister had one such loan and I gave her the $1k to kill it off. Same for no interest for a year deal on TV's.

Sadly the very average Jos doe not understand the $3k is a rip off as they didnt understand the new roof was a rip off either.

FYI

When sister needed new gutters and had cash she got 3quotes.

The Roof Mob ( you know the ones) quoted $4.5k but instantly gave her $1k off for deal NOW being an valued cutomer.

Another quoted 3.2K

Another with refs quoted $2.2k!

It should be illegal!

Peter 147

 

[skater]

Everyone's bagging the Mortgage Reduction fellows, but in all honesty I can say that it was an appointment with one of these about 10 years ago that started it all off with us.

They did exactly this & said that then we would be able to buy an investment (no doubt overpriced & sourced through them). Thing is, I liked what I learnt from them, but figured out that we could do everything without them. Which, of course, is what we did.

Oh, & the price, it was around $3k back then.

I knew a company once that would do exactly what Powerhouse seem to be doing.
1. Set up a LOC on existing house
2. pay off car loans, credit cards etc
3. All pay goes into offset account to reduce principal on your hose
4. Use credit cards always, and pay them off from the offset account within 55 days, thus keeping your pay in the offset account for longer (reducing your principal)
5. Work on a budget so you can build up the amount in your offset.

They will charge you a hefty fee for setting this up, but if you follow the above steps you can do it for nothing!