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The SMARDA calculator was created for use by mortgage brokers to assist with restructuring home loans for clients.
Brokers can input their clients’ income, expenses and liabilities into the tool, which then demonstrates how much faster they could pay off their home loans and how much interest could potentially be saved.
Dionne Lee, a Queensland-based mortgage broker and financial coach, is the co-founder of the SMARDA calculator.
According to Lee, the tool addresses a gap in the financial services industry, enabling clients to better understand how restructuring their lending could benefit their finances.
Lee, who was named Bankwest’s Broker of the Year for Queensland in 2024, said: “At the basic level, the calculator shows people how much faster they can become debt free, however, it can also show people how a potential new investment or a new loan will affect them financially either positively or negatively.
“At the moment, it has been designed for use by financial service professionals, but we are also working on a version which can be used by individuals looking to reduce their debt and make some clever investment decisions to achieve financial freedom.”
The SMARDA calculator compares the impact of sticking with a traditional 30-year mortgage and making standard monthly payments against the benefits of using offset accounts.
Offset accounts are everyday bank accounts linked to a home or investment loan, with the balance offset against the loan amount.
For principal and interest loans, the balance of the offset account reduces the interest component of regular repayments. This, in turn, allows more of the repayment to go towards reducing the principal, enabling home owners to pay off their debts more quickly.
Lee, who is also the CEO and founder of Xcellerate Finance, a Queensland-based mortgage broking firm, recommended that clients deposit all their money into their offset accounts and use a credit card for day-to-day expenses, ensuring the credit card balance is paid off in full each month to avoid interest.
This reduces the interest charged on the home or investment loan at the end of the month, effectively providing tax-free savings.
She added: “In developing the calculator, it became obvious that there was a compound effect that drastically reduced the amount of interest charged on the home loan each month.
“I find it to be a very valuable tool, for my clients both from a mortgage broking perspective, but also for clients wishing to build their investment portfolios and create more passive income.
“The idea is that people are able to pay their mortgage off much faster but without having to find any extra money each month.
“Most people think the only way to pay their mortgage off early is to make larger payments, or pay weekly or fortnightly rather than monthly, but it is about setting up the loan structure correctly so that every cent they have is working for them all the time.”
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