February 10, 2025 • 18 mins
Unlock the secrets to shaving years off your mortgage and saving thousands in interest with us. Ever wondered how small adjustments can lead to big savings in your home loan? We promise you'll discover practical, actionable tips to manage your mortgage more effectively. From switching to fortnightly payments to harnessing unexpected windfalls like bonuses to reduce your principal, we guide you through strategies that empower you to build equity faster and edge closer to financial freedom.
Throughout our enlightening discussion, we unveil advanced tactics to accelerate your mortgage payoff. Learn how to utilise an offset account to slash interest charges or leverage your equity for a positively geared investment property that generates extra income to fast-track your mortgage reduction. We stress the importance of steering clear of lifestyle inflation with an income boost, suggesting channeling those additional funds into your mortgage instead. By automating a few additional payments each year, you can significantly trim down your loan term. Plus, discover why regularly reviewing your mortgage could unlock potential savings opportunities, keeping you on track to achieving the financial freedom you desire.
DISCLAIMER:
The information in this podcast is general in nature and does not constitute personal financial advice. It does not take into account your individual objectives, financial situation, or needs. Always consider whether the information is appropriate for you and seek advice from a qualified professional before making financial decisions.
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Disclaimer:
The information provided in this podcast is general in nature and does not constitute personal financial advice. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. Asset Road Pty Ltd recommends you seek independent financial, legal, taxation or other advice as required. All investments carry risk. Past performance is not indicative of future results.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
The average Australian mortgage takes over
25 years to pay off andhomeowners could spend more than
400 grand in interest alone ona $500,000 loan.
But what if you could cut years, maybe even a decade, off your
mortgage and save tens ofthousands of dollars in interest
with a few simple strategies?
In this episode, we'll diveinto practical hacks that can
(00:24):
help you get out of debt faster,build equity sooner and free
yourself from the weight of a30-year loan.
Whether you're just starting ahome ownership journey or you
(00:52):
have been paying your mortgagefor years, these tips will
transform the way you manageyour loan.
Welcome back to another episodeof the Finance by All podcast
Zeke here and your co-host,oscar.
But before we get into it,please note that nothing in this
podcast should ever beconsidered personal financial
advice.
Of course, if that is what youare seeking, reach out.
We'll get you in touch with thecorrect professionals.
Get the job done properly, sitback, relax and enjoy the show.
(01:15):
Let's get into it.
Today I'm wanting to share a fewdifferent hacks and tips and
tricks of how to save years offyour mortgage and also, most
importantly, save thousands ofdollars in interest payments
alone, because, as mentioned,the average Australian mortgage
does take over 25 years to payoff, and myself I think that is
(01:36):
extremely long time.
Yes, that the you know yourloan terms, generally 30 years,
but that doesn't mean you haveto pay it over 30 years.
You want to be able to pay it alot sooner so you can retire
and have the option to just notpay any interest or your
mortgage repayments and do whatyou actually want to do and not
feel trapped and strangled andkind of pinned in a corner that
(01:56):
you have to make theserepayments and continue working.
How can we shave years off yourmortgage?
Because individuals, the media,people who write articles years
off your mortgage?
Because individuals, the media,people who write articles.
There's always people thenaysayers who just continue to
say it can't be done.
But the truth is there are somany different ways and you just
have to be adaptive as opposedto reactive, and kind of get on
(02:17):
the front foot and get movingearlier rather than later, and
then hopefully, if you take onthese practical tips which I'm
about to show you, you'll getahead financially and also get
closer to the life you'rewanting to live.
I want to share 12 tips, so notjust one or two, but 12.
There's so many different ones,and the good news is you don't
have to use all 12.
(02:37):
You may want to use all 12 andreally get ahead, or you might
want to use one or two, or atleast this gives you the option.
Number one make fortnightlypayments.
So when you went for your loanand you started paying it off,
you would have had the option ofweekly, fortnightly, monthly
and, pending what you've done,you may have monthly, which a
(02:57):
lot of individuals do set upmonthly because in their mind
it's delayed.
You've got four weeks, soyou've got time to build it up
if need be.
But instead of making onemonthly repayment, split your
mortgage payment in half and payit every two weeks.
By the end of the year you havemade 26 fortnightly payments,
which is the equivalent of 13full monthly payments.
I will repeat that again End ofthe year you would have made 26
(03:21):
half payments, which arefortnightly payments, which is
the equivalent of 13 monthlypayments.
So this means you are making anextra monthly repayment which
goes straight to your loanprincipal.
Just by moving it tofortnightly, you're basically
making a whole extra month ofrepayments.
So the extra payment reducesthe loan balance faster, meaning
(03:42):
that less interest is chargedover time.
So, for example, on a $500,000loan at 5% interest over 30
years, if you switched that tofortnightly payments, that
literally could save you over$70,000 in interest and also cut
your loan term by four to fiveyears, which is a long time in
the scheme of things of such asimple hack which anyone can do
(04:07):
right now, which you wouldn'teven realize which is happening.
So that simple hack of movingit to fortnightly payments can
literally save you four to fiveyears off your loan.
Number two put windfalls towardyour mortgage.
What that means is bonuses, taxrefunds, even small inheritance
you may receive.
These extra income or extramoney coming in can make a big
(04:31):
dent in your mortgage if youapply them directly to the
principal.
So if you make, for example,let's say you get a bonus at the
end of the year of five grand,if you put that $5,000 bonus
toward your mortgage and let'ssay it's a $500,000 mortgage at
5% interest rate in the firstfive years you could save over
$15,000 in interest and shaveabout six months off your loan.
(04:54):
And if you do this, let's say,once or twice a year pending, if
you get bonuses or a bit ofmore money coming through, this
compounds and the amount whichcompounds over time, will save
you significantly in the longterm, not just money but also
time.
So save your interest, but alsothe months and the years of
(05:15):
your actual loan term, which isso important.
So when I say you, you know$5,000 bonus.
It may even be you might get anextra $200 at Christmas from
your grandparents, or somethinga lot smaller.
But even if it's 50 bucks, ahundred bucks, 200 bucks, you
can put it into it and that willshave time off your mortgage as
well.
Number three round up yourpayments.
(05:35):
So, for example, with my ING,I've got that synced to my
savings and also my everydayspending accounts, so I've got
Roundup.
So if I spend $54.20, theremaining $0.80 to round it up
to $55 will go to my savings andyou can do the same to your
mortgage.
So Roundup your payments.
This one could be a little bitmore, because you're paying down
(05:56):
your mortgage.
So let's say, round it up tothe nearest $50 or $100, which
realistically isn't much ifyou've got a $500,000 loan or a
million dollar loan, but it addsup over time.
So let's say, for example, ifyour monthly mortgage repayment
is $2,380, maybe round it up to$2,400, which is an extra $20 a
(06:17):
month and that extra $20 a monthover the year adds up to $240.
So that's an extra $240 goingto your mortgage and every
dollar over the minimum paymentgoes directly towards reducing
your principal, which is vital,because once your principal
drops, your interest will dropas well, because that's
obviously calculated on yourprincipal.
So something so simple likethat and an extra $20 a month,
(06:40):
it's nothing in the scheme ofthings.
It's literally $5 a week.
So pop it up an extra 50 bucks,an extra 100 bucks.
Figure out what you can affordand make the move, because that
will definitely help youincrease it.
Number four refinance to a lowerinterest rate.
It's so surprising how manypeople don't look and call up
(07:01):
their bank to ask for a lowerinterest rate and they're just
sitting in their ways, happywhere they are, don't think that
they can actually reduce or payless.
But if you don't ask, you don'tget.
Pick up the phone, speak toyour bank, speak to your
mortgage broker, get them tocall on your behalf if need be.
But the truth is interest ratesare constantly changing.
At the moment, it's almost thestart of February.
There's rumors that there maybe a rate drop coming, so
(07:23):
there's things always changing.
Refinancing can save you tens ofthousands of dollars.
For example, if you can loweryour rate by just 1% on a
$500,000 loan, you'll saveapproximately 90 grand in
interest over 30 years, which isridiculous.
And even after refinancing,keep making payments at the old
rate.
Let's say you're currentlymaking $2,400 a month and you
(07:48):
refinance and then the paymentcomes down to $2,300.
Maybe just keep doing the$2,400, because that extra
amount will go straight towardsyour principal anyway, which
will help you pay off yourmortgage faster.
Even though you know thatyou're paying or you should be
paying less with your repayments, it doesn't mean you have to
Maybe stick to what you werepaying, because now you've got
the advantage that your rate andyour mortgage will go down
(08:09):
quicker.
So that's something to thinkabout.
Number five make extra paymentsearly.
So this is better mainly forthe early years of your mortgage
.
In the early years, most ofyour repayments go towards your
interest, not the principal,because it's a fresh loan and
you've got the maximum principalthat you're paying off.
So the interest will be a lothigher and making extra payments
(08:32):
during this period can have asignificant impact.
So, for example, we're usingnumbers just to relate to
everyone out there becauseyou've all got your own mortgage
.
So if you pay an extra $10,000in the first five years of a
$500,000 mortgage of 5%, youcould save over 30 grand just in
interest.
But the main thing and the mostimportant factor is this could
(08:54):
reduce your loan term by nearlytwo years, which, in the scheme
of things, is pretty good.
Simple numbers plan ahead cansave you a long time.
In the scheme of things ispretty good.
Simple numbers plan ahead cansave you a long time in the
scheme of things.
Number six use an offset orredraw facility.
So if those are not familiarwith an offset, an offset
account links your savings toyour mortgage.
So the amount in your offset,aka savings, that basically
(09:16):
offsets your loan balance, whichreduces the interest charge.
So if you have a $500,000 loanand you have $20,000 in an
offset account, you'll only becharged interest on $480,000.
So $500,000 minus your savingsof $20,000.
Over time this will save youtens of thousands of dollars in
(09:37):
interest and help pay off yourloan faster.
So if you don't have an offsetaccount, maybe speak to your
bank or your broker to see whatcan be done, because it
definitely will assist and helpyou towards reducing your
overall loan and paying it offquicker, and especially if
you've got savings lying around.
So if you've got savings injust a normal bank account, like
you, may as well put it intoyour offset to actually reduce
(09:57):
the payment going out, becauseit'll help you and the money
will just be sitting there.
So that's an important one.
If you haven't got that Numberseven for myself this is a big
one, it should be number one butpurchase an investment property
, pending your financialsituation, of course, and your
debt to value ratio of yourproperty.
If you have equity in your homeand significant equity, you may
(10:18):
be able to use that equity topurchase an investment property.
And the reason you look atdoing this is you'd leverage
into an investment propertypersonally, and ideally one
which is positively geared, andpop it on interest-only
repayments.
And then, if you do it rightand with the right team, you've
got excess money coming throughevery week from the rent of your
property and what you canliterally do then is flush that
(10:39):
extra income to your mortgageand pay off your owner-occupied
debt quicker and just keepsmashing it down.
And then obviously as well, ifyou're buying in a growth suburb
or a growth area, if thatproperty goes up quite
significantly over the next five, 10 years.
You could always use that tosell and then literally
extinguish all your debt fromyour owner-occupier and put all
(11:01):
the profits into that and thenyou're debt-free.
So that's another really goodoption that a lot of clients
we've spoken to have done in thepast, and with us as well.
But if you're on the fence, itcould be a good option for you.
And please note, this is notfinancial advice.
It's all general advice.
If you are seeking financialadvice, please reach out.
We can help you and put you inthe right contacts.
(11:26):
Number eight avoid lifestyleinflation.
This is important.
I see it happen a lot.
So, especially when you get abonus at work or a raise, it's
so tempting to upgrade yourlifestyle as well.
So let's say, for example, youget an extra $60,000 a year on
your income.
You may think, oh, all right,this is awesome, let's go buy a
car.
I can afford a $60,000 car, orI'll get finance for a car.
But you're not going to getahead if you increase your
(11:49):
expenses, if you increase yourincome, because you're going to
be in the same position.
So instead of upgrading yourlifestyle, why don't you just
put that extra income towardyour mortgage in the early years
of your life, if you are in theposition to do so, and then
later on, once that's gettingclose to paid off or paid off,
then you may want to upgradeyour lifestyle.
But it pays to be frugal inthese years, especially if you
(12:10):
have a mortgage which isn'tpaying your income.
If you do increase your monthlyrepayment by just $500 after
getting a pay rise, for example,this could literally cut almost
10 years off your mortgage termon a $500,000 loan at 5%.
So simple avoid your lifestyleinflation.
Don't upgrade your lifestyle.
I know it's tempting to do so,but if you do have a mortgage
(12:32):
and you're trying to get it out,just commit Short-term paying
for long-term gain.
It's as simple as that.
Number nine plan for one or twoextra payments per year.
Strategically making an extrapayment once or twice a year can
literally supercharge yourmortgage payoff strategy.
We'll go to another example ofthe numbers.
So, for example, let's sayyou're on the $500,000 mortgage
(12:53):
which I've been using this wholetime at 5% interest over 30
years.
If you make an extra $5,000payment once a year, this could
save you over $100,000 ininterest and cut your loan term
by five to six years.
And even smaller extra paymentscan help.
So if you don't want to throwin five grand a year or you
can't do it, even if you put$1,000 in a year, this could
(13:15):
also save a year or even more,so you don't have to put so much
.
People think you can only shaveoff time in your mortgage if
you put heaps of money, but thetruth is even $1,000 can help,
and over a whole year as welllike it's not much at all.
So that's a really importantone.
You just got to minimize it andreally slim it down and
simplify the whole process,because it's a lot easier than
(13:37):
you think.
Number 10, automate the extrapayments.
So if you are looking to do theextra payments, set up
automatic transfers for thepayment.
So this will ensure that you dostay consistent without the
temptation to spend the moneyelsewhere, which is important.
You may have a week when thingsdon't go your way and then you
want to have a bit of retailtherapy and go shopping and try
to make yourself feel good againby buying things that you want.
(13:58):
But if you have the automatictransfers for these payments,
you're not going to think aboutdipping into those funds because
you know for a fact lookingafter itself and it's helping
you shave down time off yourmortgage over the years and also
reduce your interest.
So the automation takes thedecision making out of the
process.
So even small, consistentcontributions add up
significantly over time.
(14:20):
Number 11, regularly review yourloan.
This is so important becausethere's so many things which
change and mortgage products andrates are constantly evolving,
so you need to regularly reviewyour loan.
So this may be calling up yourbank or calling up your mortgage
broker and having a meetingwith them, but you got to
regularly review it to ensurethat you're not paying more than
(14:43):
you need to.
So you're not paying more thannecessary For a little tip.
Negotiate with your lender forbetter terms or look to switch
to a competitive loan.
Obviously, if you have amortgage broker, they will do
this for you on a regular basisif you have a good one.
But if you're going directly tothe bank, keep that in the back
of your mind that you may needto look elsewhere, and sometimes
(15:05):
you might want to switch andsay I'm getting offered X over
here, so take it or leave itlike, match it or I'm off,
because most of the time they'llmatch it if they value you and
if they want you to stay.
So it's worth the conversation.
But you need to regularlyreview your loan because even a
small reduction in your interestrate can literally save you
thousands, depending on how muchyour loan amount is.
(15:28):
And number 12, lucky last trackyour progress.
So use mortgage calculators orapps to visualize how extra
repayments impact your loan termand your interest savings.
So, for example, moneysmart hasa great tools and great
calculators on the website.
Like I use the compoundinterest one a lot, there are
mortgage payment calculatorswhich you'll be able to see.
(15:49):
You can pop in your mortgagerepayments and your mortgage
amount and then figure out howmuch you know.
If you make extra payments permonth or year, how much of that
shave off your loan term.
So play around with thesecalculators because there's so
many.
But this will basicallymotivate you to get you moving,
because if you can see that ifyou put in a hundred bucks extra
(16:10):
a month and that will save youfive to 10 years, well, seeing
how much closer you are to beingmortgage-free, this will help
you stay motivated.
And putting that 100 bucks amonth in every single month, no
matter what and sometimes youmay even put 120 bucks a month
but visualizing it and lookingat it and seeing what can be
done.
This will help you propel andget you closer to being
(16:33):
mortgage-free.
And there you have it.
They're the 12 tips and tricksto really help you get rid of
your mortgage as soon aspossible, because it is possible
.
In finishing, it's all aboutsmall changes and the power of
small changes, because payingoff your mortgage faster isn't
just about saving money.
It's about gaining the freedomand doing what you want to do
(16:55):
and not being stressed to havingto pay the mortgage and making
the income to put straight intothe mortgage.
You may want to put that incomesomewhere else, like look after
your family or go on a trip orgo out for dinner, but whether
you make small or consistentchanges, even larger or
strategic moves, every extradollar you contribute takes you
one step closer to thatfinancial independence.
(17:16):
So you must start implementingthese hacks today.
And if you do, watch the yearsliterally fall off your mortgage
and remember it's not justabout making more money, it's
about making your money worksmarter for you.
And trust me, you can do it.
Follow these simple 12 tips ortricks and it will put you one
(17:36):
step closer.
And, of course, if you have anyquestions or you wanna get in
touch or you want to actuallyspeak to a mortgage broker.
We're always happy to put youin touch with mortgage brokers
and professionals in theindustry which we know, which
we've spoken to, which we workwith, and they'll be able to
have a chat.
They can have a confidentialchat with you, even see what
(17:58):
your current setup and yourcurrent structure is like,
because there's always ways andthere's always ways to improve
things.
So if that's you, hit us up,throw us a message.
Conclusion I hope you enjoyedthis episode and the 12 tips and
tricks, as always.
If you found this podcastepisode valuable, share it with
friends and family.
The more you share, the moreyou grow, and the more you grow,
(18:18):
the better episodes we'll haveand better guests we'll be able
to have for you to interview.
And if you haven't, please giveus a rating on Spotify and
Apple Podcasts, because ratingsgo a long way.
But until next time, ciao.
We hope you enjoyed the episode.
As, as always, you know exactlywhat to do.
Hit that follow button,subscribe whatever platform you
(18:40):
listen to this podcast on.
Also, share it to friends,family, co-workers, wherever you
think may benefit from it.
But uh, unfortunately it's theend and we'll see you next week.
The average Australian mortgage takes over
25 years to pay off andhomeowners could spend more than
400 grand in interest alone ona $500,000 loan.
But what if you could cut years, maybe even a decade, off your
mortgage and save tens ofthousands of dollars in interest
with a few simple strategies?
In this episode, we'll diveinto practical hacks that can
(00:24):
help you get out of debt faster,build equity sooner and free
yourself from the weight of a30-year loan.
Whether you're just starting ahome ownership journey or you
(00:52):
have been paying your mortgagefor years, these tips will
transform the way you manageyour loan.
Welcome back to another episodeof the Finance by All podcast
Zeke here and your co-host,oscar.
But before we get into it,please note that nothing in this
podcast should ever beconsidered personal financial
advice.
Of course, if that is what youare seeking, reach out.
We'll get you in touch with thecorrect professionals.
Get the job done properly, sitback, relax and enjoy the show.
(01:15):
Let's get into it.
Today I'm wanting to share a fewdifferent hacks and tips and
tricks of how to save years offyour mortgage and also, most
importantly, save thousands ofdollars in interest payments
alone, because, as mentioned,the average Australian mortgage
does take over 25 years to payoff, and myself I think that is
(01:36):
extremely long time.
Yes, that the you know yourloan terms, generally 30 years,
but that doesn't mean you haveto pay it over 30 years.
You want to be able to pay it alot sooner so you can retire
and have the option to just notpay any interest or your
mortgage repayments and do whatyou actually want to do and not
feel trapped and strangled andkind of pinned in a corner that
(01:56):
you have to make theserepayments and continue working.
How can we shave years off yourmortgage?
Because individuals, the media,people who write articles years
off your mortgage?
Because individuals, the media,people who write articles.
There's always people thenaysayers who just continue to
say it can't be done.
But the truth is there are somany different ways and you just
have to be adaptive as opposedto reactive, and kind of get on
(02:17):
the front foot and get movingearlier rather than later, and
then hopefully, if you take onthese practical tips which I'm
about to show you, you'll getahead financially and also get
closer to the life you'rewanting to live.
I want to share 12 tips, so notjust one or two, but 12.
There's so many different ones,and the good news is you don't
have to use all 12.
(02:37):
You may want to use all 12 andreally get ahead, or you might
want to use one or two, or atleast this gives you the option.
Number one make fortnightlypayments.
So when you went for your loanand you started paying it off,
you would have had the option ofweekly, fortnightly, monthly
and, pending what you've done,you may have monthly, which a
(02:57):
lot of individuals do set upmonthly because in their mind
it's delayed.
You've got four weeks, soyou've got time to build it up
if need be.
But instead of making onemonthly repayment, split your
mortgage payment in half and payit every two weeks.
By the end of the year you havemade 26 fortnightly payments,
which is the equivalent of 13full monthly payments.
I will repeat that again End ofthe year you would have made 26
(03:21):
half payments, which arefortnightly payments, which is
the equivalent of 13 monthlypayments.
So this means you are making anextra monthly repayment which
goes straight to your loanprincipal.
Just by moving it tofortnightly, you're basically
making a whole extra month ofrepayments.
So the extra payment reducesthe loan balance faster, meaning
(03:42):
that less interest is chargedover time.
So, for example, on a $500,000loan at 5% interest over 30
years, if you switched that tofortnightly payments, that
literally could save you over$70,000 in interest and also cut
your loan term by four to fiveyears, which is a long time in
the scheme of things of such asimple hack which anyone can do
(04:07):
right now, which you wouldn'teven realize which is happening.
So that simple hack of movingit to fortnightly payments can
literally save you four to fiveyears off your loan.
Number two put windfalls towardyour mortgage.
What that means is bonuses, taxrefunds, even small inheritance
you may receive.
These extra income or extramoney coming in can make a big
(04:31):
dent in your mortgage if youapply them directly to the
principal.
So if you make, for example,let's say you get a bonus at the
end of the year of five grand,if you put that $5,000 bonus
toward your mortgage and let'ssay it's a $500,000 mortgage at
5% interest rate in the firstfive years you could save over
$15,000 in interest and shaveabout six months off your loan.
(04:54):
And if you do this, let's say,once or twice a year pending, if
you get bonuses or a bit ofmore money coming through, this
compounds and the amount whichcompounds over time, will save
you significantly in the longterm, not just money but also
time.
So save your interest, but alsothe months and the years of
(05:15):
your actual loan term, which isso important.
So when I say you, you know$5,000 bonus.
It may even be you might get anextra $200 at Christmas from
your grandparents, or somethinga lot smaller.
But even if it's 50 bucks, ahundred bucks, 200 bucks, you
can put it into it and that willshave time off your mortgage as
well.
Number three round up yourpayments.
(05:35):
So, for example, with my ING,I've got that synced to my
savings and also my everydayspending accounts, so I've got
Roundup.
So if I spend $54.20, theremaining $0.80 to round it up
to $55 will go to my savings andyou can do the same to your
mortgage.
So Roundup your payments.
This one could be a little bitmore, because you're paying down
(05:56):
your mortgage.
So let's say, round it up tothe nearest $50 or $100, which
realistically isn't much ifyou've got a $500,000 loan or a
million dollar loan, but it addsup over time.
So let's say, for example, ifyour monthly mortgage repayment
is $2,380, maybe round it up to$2,400, which is an extra $20 a
(06:17):
month and that extra $20 a monthover the year adds up to $240.
So that's an extra $240 goingto your mortgage and every
dollar over the minimum paymentgoes directly towards reducing
your principal, which is vital,because once your principal
drops, your interest will dropas well, because that's
obviously calculated on yourprincipal.
So something so simple likethat and an extra $20 a month,
(06:40):
it's nothing in the scheme ofthings.
It's literally $5 a week.
So pop it up an extra 50 bucks,an extra 100 bucks.
Figure out what you can affordand make the move, because that
will definitely help youincrease it.
Number four refinance to a lowerinterest rate.
It's so surprising how manypeople don't look and call up
(07:01):
their bank to ask for a lowerinterest rate and they're just
sitting in their ways, happywhere they are, don't think that
they can actually reduce or payless.
But if you don't ask, you don'tget.
Pick up the phone, speak toyour bank, speak to your
mortgage broker, get them tocall on your behalf if need be.
But the truth is interest ratesare constantly changing.
At the moment, it's almost thestart of February.
There's rumors that there maybe a rate drop coming, so
(07:23):
there's things always changing.
Refinancing can save you tens ofthousands of dollars.
For example, if you can loweryour rate by just 1% on a
$500,000 loan, you'll saveapproximately 90 grand in
interest over 30 years, which isridiculous.
And even after refinancing,keep making payments at the old
rate.
Let's say you're currentlymaking $2,400 a month and you
(07:48):
refinance and then the paymentcomes down to $2,300.
Maybe just keep doing the$2,400, because that extra
amount will go straight towardsyour principal anyway, which
will help you pay off yourmortgage faster.
Even though you know thatyou're paying or you should be
paying less with your repayments, it doesn't mean you have to
Maybe stick to what you werepaying, because now you've got
the advantage that your rate andyour mortgage will go down
(08:09):
quicker.
So that's something to thinkabout.
Number five make extra paymentsearly.
So this is better mainly forthe early years of your mortgage
.
In the early years, most ofyour repayments go towards your
interest, not the principal,because it's a fresh loan and
you've got the maximum principalthat you're paying off.
So the interest will be a lothigher and making extra payments
(08:32):
during this period can have asignificant impact.
So, for example, we're usingnumbers just to relate to
everyone out there becauseyou've all got your own mortgage
.
So if you pay an extra $10,000in the first five years of a
$500,000 mortgage of 5%, youcould save over 30 grand just in
interest.
But the main thing and the mostimportant factor is this could
(08:54):
reduce your loan term by nearlytwo years, which, in the scheme
of things, is pretty good.
Simple numbers plan ahead cansave you a long time.
In the scheme of things ispretty good.
Simple numbers plan ahead cansave you a long time in the
scheme of things.
Number six use an offset orredraw facility.
So if those are not familiarwith an offset, an offset
account links your savings toyour mortgage.
So the amount in your offset,aka savings, that basically
(09:16):
offsets your loan balance, whichreduces the interest charge.
So if you have a $500,000 loanand you have $20,000 in an
offset account, you'll only becharged interest on $480,000.
So $500,000 minus your savingsof $20,000.
Over time this will save youtens of thousands of dollars in
(09:37):
interest and help pay off yourloan faster.
So if you don't have an offsetaccount, maybe speak to your
bank or your broker to see whatcan be done, because it
definitely will assist and helpyou towards reducing your
overall loan and paying it offquicker, and especially if
you've got savings lying around.
So if you've got savings injust a normal bank account, like
you, may as well put it intoyour offset to actually reduce
(09:57):
the payment going out, becauseit'll help you and the money
will just be sitting there.
So that's an important one.
If you haven't got that Numberseven for myself this is a big
one, it should be number one butpurchase an investment property
, pending your financialsituation, of course, and your
debt to value ratio of yourproperty.
If you have equity in your homeand significant equity, you may
(10:18):
be able to use that equity topurchase an investment property.
And the reason you look atdoing this is you'd leverage
into an investment propertypersonally, and ideally one
which is positively geared, andpop it on interest-only
repayments.
And then, if you do it rightand with the right team, you've
got excess money coming throughevery week from the rent of your
property and what you canliterally do then is flush that
(10:39):
extra income to your mortgageand pay off your owner-occupied
debt quicker and just keepsmashing it down.
And then obviously as well, ifyou're buying in a growth suburb
or a growth area, if thatproperty goes up quite
significantly over the next five, 10 years.
You could always use that tosell and then literally
extinguish all your debt fromyour owner-occupier and put all
(11:01):
the profits into that and thenyou're debt-free.
So that's another really goodoption that a lot of clients
we've spoken to have done in thepast, and with us as well.
But if you're on the fence, itcould be a good option for you.
And please note, this is notfinancial advice.
It's all general advice.
If you are seeking financialadvice, please reach out.
We can help you and put you inthe right contacts.
(11:26):
Number eight avoid lifestyleinflation.
This is important.
I see it happen a lot.
So, especially when you get abonus at work or a raise, it's
so tempting to upgrade yourlifestyle as well.
So let's say, for example, youget an extra $60,000 a year on
your income.
You may think, oh, all right,this is awesome, let's go buy a
car.
I can afford a $60,000 car, orI'll get finance for a car.
But you're not going to getahead if you increase your
(11:49):
expenses, if you increase yourincome, because you're going to
be in the same position.
So instead of upgrading yourlifestyle, why don't you just
put that extra income towardyour mortgage in the early years
of your life, if you are in theposition to do so, and then
later on, once that's gettingclose to paid off or paid off,
then you may want to upgradeyour lifestyle.
But it pays to be frugal inthese years, especially if you
(12:10):
have a mortgage which isn'tpaying your income.
If you do increase your monthlyrepayment by just $500 after
getting a pay rise, for example,this could literally cut almost
10 years off your mortgage termon a $500,000 loan at 5%.
So simple avoid your lifestyleinflation.
Don't upgrade your lifestyle.
I know it's tempting to do so,but if you do have a mortgage
(12:32):
and you're trying to get it out,just commit Short-term paying
for long-term gain.
It's as simple as that.
Number nine plan for one or twoextra payments per year.
Strategically making an extrapayment once or twice a year can
literally supercharge yourmortgage payoff strategy.
We'll go to another example ofthe numbers.
So, for example, let's sayyou're on the $500,000 mortgage
(12:53):
which I've been using this wholetime at 5% interest over 30
years.
If you make an extra $5,000payment once a year, this could
save you over $100,000 ininterest and cut your loan term
by five to six years.
And even smaller extra paymentscan help.
So if you don't want to throwin five grand a year or you
can't do it, even if you put$1,000 in a year, this could
(13:15):
also save a year or even more,so you don't have to put so much
.
People think you can only shaveoff time in your mortgage if
you put heaps of money, but thetruth is even $1,000 can help,
and over a whole year as welllike it's not much at all.
So that's a really importantone.
You just got to minimize it andreally slim it down and
simplify the whole process,because it's a lot easier than
(13:37):
you think.
Number 10, automate the extrapayments.
So if you are looking to do theextra payments, set up
automatic transfers for thepayment.
So this will ensure that you dostay consistent without the
temptation to spend the moneyelsewhere, which is important.
You may have a week when thingsdon't go your way and then you
want to have a bit of retailtherapy and go shopping and try
to make yourself feel good againby buying things that you want.
(13:58):
But if you have the automatictransfers for these payments,
you're not going to think aboutdipping into those funds because
you know for a fact lookingafter itself and it's helping
you shave down time off yourmortgage over the years and also
reduce your interest.
So the automation takes thedecision making out of the
process.
So even small, consistentcontributions add up
significantly over time.
(14:20):
Number 11, regularly review yourloan.
This is so important becausethere's so many things which
change and mortgage products andrates are constantly evolving,
so you need to regularly reviewyour loan.
So this may be calling up yourbank or calling up your mortgage
broker and having a meetingwith them, but you got to
regularly review it to ensurethat you're not paying more than
(14:43):
you need to.
So you're not paying more thannecessary For a little tip.
Negotiate with your lender forbetter terms or look to switch
to a competitive loan.
Obviously, if you have amortgage broker, they will do
this for you on a regular basisif you have a good one.
But if you're going directly tothe bank, keep that in the back
of your mind that you may needto look elsewhere, and sometimes
(15:05):
you might want to switch andsay I'm getting offered X over
here, so take it or leave itlike, match it or I'm off,
because most of the time they'llmatch it if they value you and
if they want you to stay.
So it's worth the conversation.
But you need to regularlyreview your loan because even a
small reduction in your interestrate can literally save you
thousands, depending on how muchyour loan amount is.
(15:28):
And number 12, lucky last trackyour progress.
So use mortgage calculators orapps to visualize how extra
repayments impact your loan termand your interest savings.
So, for example, moneysmart hasa great tools and great
calculators on the website.
Like I use the compoundinterest one a lot, there are
mortgage payment calculatorswhich you'll be able to see.
(15:49):
You can pop in your mortgagerepayments and your mortgage
amount and then figure out howmuch you know.
If you make extra payments permonth or year, how much of that
shave off your loan term.
So play around with thesecalculators because there's so
many.
But this will basicallymotivate you to get you moving,
because if you can see that ifyou put in a hundred bucks extra
(16:10):
a month and that will save youfive to 10 years, well, seeing
how much closer you are to beingmortgage-free, this will help
you stay motivated.
And putting that 100 bucks amonth in every single month, no
matter what and sometimes youmay even put 120 bucks a month
but visualizing it and lookingat it and seeing what can be
done.
This will help you propel andget you closer to being
(16:33):
mortgage-free.
And there you have it.
They're the 12 tips and tricksto really help you get rid of
your mortgage as soon aspossible, because it is possible
.
In finishing, it's all aboutsmall changes and the power of
small changes, because payingoff your mortgage faster isn't
just about saving money.
It's about gaining the freedomand doing what you want to do
(16:55):
and not being stressed to havingto pay the mortgage and making
the income to put straight intothe mortgage.
You may want to put that incomesomewhere else, like look after
your family or go on a trip orgo out for dinner, but whether
you make small or consistentchanges, even larger or
strategic moves, every extradollar you contribute takes you
one step closer to thatfinancial independence.
(17:16):
So you must start implementingthese hacks today.
And if you do, watch the yearsliterally fall off your mortgage
and remember it's not justabout making more money, it's
about making your money worksmarter for you.
And trust me, you can do it.
Follow these simple 12 tips ortricks and it will put you one
(17:36):
step closer.
And, of course, if you have anyquestions or you wanna get in
touch or you want to actuallyspeak to a mortgage broker.
We're always happy to put youin touch with mortgage brokers
and professionals in theindustry which we know, which
we've spoken to, which we workwith, and they'll be able to
have a chat.
They can have a confidentialchat with you, even see what
(17:58):
your current setup and yourcurrent structure is like,
because there's always ways andthere's always ways to improve
things.
So if that's you, hit us up,throw us a message.
Conclusion I hope you enjoyedthis episode and the 12 tips and
tricks, as always.
If you found this podcastepisode valuable, share it with
friends and family.
The more you share, the moreyou grow, and the more you grow,
(18:18):
the better episodes we'll haveand better guests we'll be able
to have for you to interview.
And if you haven't, please giveus a rating on Spotify and
Apple Podcasts, because ratingsgo a long way.
But until next time, ciao.
We hope you enjoyed the episode.
As, as always, you know exactlywhat to do.
Hit that follow button,subscribe whatever platform you
(18:40):
listen to this podcast on.
Also, share it to friends,family, co-workers, wherever you
think may benefit from it.
But uh, unfortunately it's theend and we'll see you next week.
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