Most mortgage terms are 30 years, but how great would it be to pay it off much sooner?
Here are some tips from personal finance experts on how to half the time a typical mortgage takes to pay off.
Pay more than the minimum repayments
This doesn’t mean paying double the amount of your repayments, but by adding another two-thirds, you’ll shave 15 years off your loan.
Cut back on the small stuff
Two bought coffees a day might cost $10 which is $50 a week and over $2500 in a year which, in after-tax income, could mean you’ll have to earn $5000 a year to pay. Swap it out for instant coffee, or try limiting the number of coffees you are buying per week.
Review loans regularly
Get into the habitat of reviewing your loans at least every three years. Go to your existing bank and ask for a better deal or consider shifting to a new bank and the savings you can make could be substantial.
Don’t take on too big a home loan
Banks may offer applicants the maximum they can afford, but it is recommended accepting a loan for no more than four and a half times your gross income.
Don’t try to keep up with the Joneses
Avoid the temptation to scroll through Instagram looking at other people’s holidays or cars, there are plenty of activities that you can do for free.
Set up an offset account
Make sure any spare cash you have goes into an offset account attached to your home loan. Any money in an offset account reduces the balance used to calculate interest. The more money in the offset account, the less interest payable.
Source: domain.com.au