Think about this: Sarah, a vibrant Australian homeowner, is drinking her coffee on a lovely morning in Melbourne and looking at her perfect backyard. The Reserve Bank of Australia (RBA) just lowered the cash rate to 3.85% on May 20. It’s now June 24, 2025, at 07:54 PM AEST. With mortgage rates at 5–6%, she’s buzzing too, thinking, “Should I pay off that $400,000 home loan or start investing?”
And the story goes like….
“Oi, Sarah,” her friend Dave cries over the fence. “I heard the RBA cut rates. It’s time to pay off that loan quickly.” “Maybe,” Sarah says, “but what if I invest instead and watch my money grow?” She is interested and calls her lender to talk.
The Prepayment Adventure: Getting Rid of Debt with Every Dollar
Sarah calls later that day. “So, what happens if I add an extra $200 to my 5.5% loan each month?” she wonders. The lender smiles and says, “Love, you’d save more than $60,000 in interest and cut 4–5 years off that 25-year term!” Plus, your loan-to-value ratio goes down, so you won’t have to deal with Lenders Mortgage Insurance (LMI) anymore!
Sarah’s eyes get bigger. “Great! I could finally arrange that trip to the beach since I had less debt and less stress. But then she stops. “Wait, will I have to pay a fee on my fixed-rate loan?” The lender agrees. “Check the fine print; it could be 1–2%.” And if you tie up cash, you might not be able to get it back if the automobile breaks down.
“Fair go,” Sarah says under her breath. “Maybe investing could do better than that.” What do you think, Dave?
The Investment Quest: Making a Lot of Money Tomorrow
Dave leans over and smiles. “Hey, I’m making 7–9% a year with ASX 200 shares! Think about how your money could grow into a retirement fund or a vacation home! Sarah is addicted. “Spread the risk with bonds, stocks, or property trusts?” “Sign me up!”
“Whoa, wait a minute,” Dave says. “Markets can go down, and losses happen. And the interest on your loan keeps going up. You should either study this more or get some help. Sarah shakes her head. “It’s a crazy ride, but the chance to grow is too good to pass up!”
Sarah has to make a big choice: which path to take?
Sarah is at her kitchen table that night, using a calculator. She does her math.”If my loan’s more than 6%, prepaying is the way to go—saves a lot of money up front,” she thinks. “But if it’s less than 4.5% and I have an emergency fund for 3 to 6 months, investing in ASX ETFs looks great!”
“Why not both?” Dave joins in. “Divide it up: half for investing and half for paying off debt.” Be brave and play it safe! Sarah’s face lights up. “Great idea! And since the RBA cut, I’ll look at refinancing first to see if I can get a better rate. Let’s do this!
Why work with Sri Finance?
“Hold the phone”, Sarah says as she calls Sri Finance. “Hey, you guys can fix this mess, right?” Our expert laughs, “You’re correct, Sarah! We’ll look for the finest lenders, crunch your figures, and make a strategy for you. You can choose whether you want to get out of debt or expand your wealth. With our help, her voyage is going as smoothly as a kangaroo hop.
The Happy Ending for Sarah
At the conclusion of the week, Sarah is happy. “Prepaying saves me interest and gives me more freedom, and investing grows my future—love it!” I’ll match it to the rate and risk of my loan. Are you ready for your own adventure? Get in touch with Sri Finance to get a custom plan that will help you make your financial fairy tale come true!
