Is it possible to pay off your mortgage in 5 years?Tom Uhlich
We recently received a call from one of our clients that paid off their home loan in 5 years. We had to find out how, so sat down with them to get the low down.
It was very drastic but it worked. Given not everyone can follow their plan we have included a couple of other methods that will help you pay your home loan off faster.
Their method….we call it HALF & HALF
Julie and Michael went hard on their mortgage to have it paid off quickly. They basically lived off one of their salaries and used the other half to pay off their Mortgage.
Their budget was VERY tight, they kept a note of every dollar, I mean every dollar. They worked out their bills and set up an account for that money and had another account for food, petrol, travel…etc. Anything else was used to pay off their mortgage. This budget gave them no money for impulse buying…boring eh? Well they now own their house outright…not the bank! They also made use of an offset account…which took 8 years off the term of the loan. If you are not using an offset or have one and not using it properly, contact us now and we will show you how it works.
If this is too extreme for you (and would be for most), there is another way…15 YEARS
Instead of refinancing to the usual 30 year term, refinance to a 15 year term. On a loan of $400k, that’s an extra repayment of $250pw…saving you $142,000 interest!
If these two methods are too crazy for you…there is a sneaky way to pay off your mortgage faster.
We are surprised by how many people are still making their mortgage repayments monthly!!!! By simply switching to fortnightly repayments, you gain an extra repayment every year. Couple this with dropping any tax refunds to your mortgage you can cut 5 years off your loan term. Give this an extra boost by using an Offset account and you can easily take 10 years off your mortgage.
Some other tips in saving money which could go towards the Mortgage are….
1. Stop your gym membership and exercise outside
2. Less restaurant trips and cook and entertain at home
3. Keep money in your paypal account and transfer to the Mortgage at the end of every month
4. Make coffee at home instead of buying
5. Buy food in bulk
6. Renegotiate your utility bills and insurance
Remember, all these are not forever, short term pain for long term gain.
If you want to pay off your mortgage faster, contact Boss Money to discuss the various structures available. At minimum, make your repayments fortnightly!!
Just by using an Offset account correctly and switching your repayments to fortnightly you can easily take 8-10 years off your loan term.