Buying a home is exciting.
You find the perfect house, organise the finance/mortgage, settle in and start to enjoy the feeling of comfort and security that comes with owning your own home.
Problem is, you don’t own it.
The bank does.
And for many people, especially busy professionals who might have large tax bills that come with employee share plans, it can feel like you are never making in roads.
Its nice to own the big house, in the nice street.
You look at your home loan balance and think to yourself, well, its not that big and we make the repayments easily.
Problem is, these repayments stretch out sometimes 30 years.
If you are in your 40’s, this means you could still be making home loan repayments into your 60’s.
Not a good feeling.
But there is a better way.
We all know the benefit of paying a little extra, and this is not amazing advice.
But, when coupled with a few other strategies, it all comes together to make a pretty amazing difference.
1. First, create a nice spreadsheet that has your mortgage balance at the top, your home loan repayment and interest coming off each month and the balance at the end of the month. Create this spreadsheet over the life of the loan. Now, if this doesn’t scare you into take action when you see the numbers, nothing will.
2. Pay an extra $50 per week (or say $200 per month) off your mortgage. Just add a reminder in your calendar at the end of each month and do it. You won’t miss it.
3. Structure your home loan so you have an offset account that is linked to your home loan. If you don’t have one, or don’t know what this is, probably a good time to reach out to me and ask. Make sure you have your salary and any future money paid into this account.
4. Pay your credit card balance off each month, not the full balance, just the balance from the payments you made the month before so you pay no interest.
5. Never, I repeat, never, draw money from your mortgage re draw account unless absolutely necessary. If you can’t pay for something from your cash flow, you can’t afford it, so don’t but it.
Do these 5 things and I guarantee you will have your home loan paid off in 10 years. You will feel empowered to pay off the home loan faster by seeing you hit the targets you set on the spreadsheet.
Want to learn more?
Join us at our next Lunch and Learn Webinar to start your journey.