How to pay off your home faster
For many people a mortgage is the biggest loan they will ever take out, but there are ways to help pay it off faster. Have a listen to the episode below all about how to do this, and read these top tips for paying that mortgage off sooner:
Start well – start with a realistically sized mortgage
Just because you can afford a large mortgage, doesn’t mean you should. Setting up a huge loan can set up significant stress for the next 15-30 years. Try and achieve a maximum of 20 - 30% of your net income spent in repayments on your mortgage. If the area you want to live in is valued way above what you can afford – consider rentvesting in a different area instead, maintaining the 20-30% maximum in rent payments (less if you can!).
Structure your mortgage well – use an offset account
Any spare cash? Throw it in your offset account. You can draw it back out as you need it, but hopefully it can sit there continuing to offset your debt. If you’re worried about spending that money then don’t have a card for the account and don’t have the banking app on your phone. Pretend the account doesn’t exist.
Make your repayments fortnightly
This gives you one extra payment per year, which over the life of the mortgage does add up and help pay off more. Setting it up weekly is also an option to achieve this.
Assess your loan every 12 months at minimum
A lot of things can change in the lending world, and banking products shift continuously. Talk with your broker and be on the front foot to ensure you’re getting the best deal, and have your loan set up with the best structure for your situation.
Generate extra cash to put into your offset account or pay off the loan
Look through your house and sell off things you don’t need, or setup a side hustle to help tackle the debt. Go hard, and pay off more of that home.
One for the investors – funnel funds from renters into your offset account
Utilise that cash to help keep interest low. Ensure you know what is investment income and what is personal income, however. Understand this for tax time.
Manage your money well
Work out how much it costs to live and don’t let lifestyle inflation catch you. Keep your expenses lean. Throw tax returns or work bonuses into your offset account or onto the loan.
Make sure you and your significant other are on the same page
It’s critical to work together to tackle something as big as a mortgage. Talk to each other about your goals with life and your loan and create a plan of attack together. You’ll get where you both want to go a lot faster working together.
Use bonus cash or additional income well
If you get a bonus or increased income, put this straight onto the mortgage as you were already living your life before this extra income came into your life.
