Buying a home is the biggest investment most Australians will make in their lifetime. Buying a home usually comes with a mortgage paid monthly.
Do you have a mortgage on your property? Is paying off your mortgage a priority for you?
Nearly three-quarters of Australians feel that paying off a mortgage is the most substantial financial goal they can achieve. Australia is one of the most expensive countries in which to live, which is one of the main reasons Aussies see paying off your mortgage as beneficial.
We’re excited to tell you that – believe it or not – paying your mortgage off within 10 years IS an attainable goal!
The Benefits of Paying Off Your Mortgage
Paying off your mortgage has monetary benefits like:
- Financial Security
- Less Stress
- Happier Life
- Better Quality Lifestyle
- More Holiday Money
- Saves You Money
- No More Money Arguments
- No More Worrying About Paying Bills
- Early Retirement
- Private School for Your Kids
- Travel Abroad
How Can You Pay Off Your Mortgage Faster?
You may not realize you can pay off your mortgage in 10 years (or less) by setting up your own budget and payment plan. It takes only some slight deviations in paying your home loan, and will also save you hundreds – if not thousands – of dollars.
You don’t need a large income ($500,000 plus per year), an inheritance, lottery winnings, or any other kind of financial windfall to get started paying off your mortgage. Even if you’re living on the average Australian wage, about $60,000 per annum, you can certainly pay off your mortgage within 7-10 years.
Here’s How to Pay Off Your Mortgage
Create a plan – Sit down and plan your strategy. Let’s roughly estimate some numbers based on an average income and a $300,000 mortgage loan with 5 per cent interest.
A single income household making $70,0000 per annum can pay off their home loan within 15 years with fortnightly payments of $1,300. A dual income household making $140,000 per annum can pay off their mortgage at $2,600 per fortnight.
This just gives you an idea of how the concept works. It’s possible if you focus on paying down debt. Figure out your time frame and calculate the payment required to meet the pay-off time. You can use an online mortgage repayment calculator to estimate your payments. Once you have an idea of how much you can pay per fortnight, you can work towards meeting your goal.
Automate and set your repayment higher – Making higher fortnight payments helps you meet your repayment timeline goals faster. Also, setting up automated payments keeps you on track. For example, if you get paid on the 15th monthly, set an automated mortgage payment equal to 50 per cent of your pay to come out on the 16th as an extra home loan payment. Your normal mortgage payment should be made at the regular time.
By doing this, you can pay off your mortgage faster. Adjust your automated payments as needed to take control of your home loan.
Focus and stay motivated – The temptation to stop extra mortgage payments is a challenge. You must resist shrugging it off to stay in control and keep to your goal. Plan to do this throughout your scheduled time frame of between 5 and 10 years.
Every time you’re tempted by something you want, remember your mortgage pay-off goal. Nothing should prevent you from paying off your mortgage within 10 years or less. It helps to create a spreadsheet to look at frequently as a friendly reminder.
Cut expenses and use money efficiently – It should go without saying, but it’s worth a reminder to you must cut household expenses wherever you can and use that money towards paying off your mortgage.
It shouldn’t be difficult to find extra available income. Trim up your household bills, use money from pay rises you get towards the mortgage, limit or stop impulse buying and extraneous ‘luxury’ expenses.
Go big and go all-in when you’re planning to pay off your mortgage in 10 years. Go above and beyond the norm and create a repayment plan that requires more than the average of five per cent above your current mortgage payment to make your goal. It’s a worthy accomplishment.
First Choice Mortgage Brokers are a Sydney Mortgage Broker operating under the Australian Credit Licence Number: 382370