Hacks to paying off your mortgage quicker
By Rebecca Jarrett-Dalton
Owning a home is an amazing feeling, having a mortgage - not so much. A necessary evil right?
Nearly everyone with a mortgage also wants to pay it off quicker and reduce their interest costs. So what are some easy ways to pay off your mortgage quicker?
1. Match your repayments to your pay cycle, this makes budgeting easier and the money is in the loan sooner. Also match the date of your repayments to your pay dates. For example if you get paid on the 15th and 30th of each month, ask the bank to change your repayment dates to the 16th and 1st of each month. This way you don’t have to worry each fortnight or month if the money is going to be in the account each month and reduces some stress levels.
2. Be savvy with your savings. Pop them in an offset or redraw account which will save interest and make your repayments go further. Saving interest is generally way better then earning interest in a savings or even a high interest bearing account, so accelerate the savings using your loan cleverly.
3. Round up your payments - how far can you go? To the next 10? The next 50? 100? Even out the thousand? Rounding up your payments is an easy way to start paying off your mortgage quicker. Start out small and increase over time as you get more comfortable and savvy with your savings.
4. Review your rate regularly, better you enjoy the savings than pay too much interest. Speak with your broker regularly to see who is offering the best rate.
5. Set yourself a time goal – and smash it! Use an online calculator to work out how much you need to repay to have it gone in 25, 20, 15 – even 10 years!! Or set a deadline to shrink the balance to $x by a date and track it – gamify your mortgage. You can’t change what you don’t measure, so get to know your numbers and track your progress.
6. The biggee... flip your banking around - instead of sending all your cash to your savings and then aiming to pay more on your loan, get a minimum figure sent to your savings and all the rest straight into the loan - that includes any overtime bonus’ as well!
Paying off your mortgage quicker is a commitment and isn’t something that will happen unless you make it happen. It also isn’t just about paying more than your standard monthly repayments. It is also about the timing of the repayments and being savvy about your banking processes.
Whilst paying off your mortgage quicker does take time and effort, just keep thinking about that magic day when you know you no longer have to make mortgage repayments and the money that you earn is all yours to play with! Close our eyes and imagine what that looks like. Now open that spreadsheet and start working on your short and long term goals.
