Financial expert shares tips to save $ 94,000 on your mortgage
There’s an easy way to save $ 94,000 on a $ 500,000 mortgage – and if your mortgage is higher, you’ll save even more.
With sky-high house prices across Australia and equally impressive mortgage debt levels, paying off your mortgage can seem like a colossal job. And it clearly takes serious work to get there, but there are a few simple tips you can use to get there – if you know what to watch out for.
Based on a 30-year $ 500,000 mortgage at the current average interest rate of 3%, you will pay $ 262,487 in interest charges, which is more than half of the original amount you have. borrowed.
But, if you could manage to pay off that mortgage over 20 years instead of 30, your interest bill would be reduced by over $ 94,000, which would reduce your interest costs by over 36%. And in addition to the interest savings, you will be released from your debts 10 years earlier.
It’s not easy, but there are some things you can do to make it happen faster and easier.
The mortgage market is very competitive and the banks and the big financial institutions really want your business. This means that they will offer high interest rates, repayment offers, discounts, and other perks that come with changing your mortgage regularly.
You should be aware that changing your mortgage often comes with costs, including application and administration fees, in addition to the time it takes to go through the refinancing process. You need to make sure that you are doing better once these costs are factored into the change.
Set aside time to regularly follow up on what’s on offer; you will be surprised how much you can save.
Created by financial advisor Ben Nash, Cashed Up is news.com.au’s free six-week course to help Australians take control of their finances. Those who sign up for the Budget Bootcamp are given weekly, step-by-step challenges to improve their financial health.
By the end of the six weeks, participants will have budgeted, created a savings plan, learned to invest and paid their retirement pensions. The interactive course can be started at any time and aims to empower participants to make more informed financial decisions.
Set debt reduction goals and timelines
Because paying down a mortgage is a big job, you want to give yourself all the advantages to make it happen. Like any great goal, you have to put in some effort. Staying motivated while you work will go a long way in helping you stay the course.
There’s an old adage that the best way to eat an elephant is one bite at a time, and when it comes to paying off a big mortgage, it rings true. Think about when you want to get off your mortgage, then look back to figure out what you need to do to get there.
Use milestones along the way that you can celebrate as you progress, then be perfectly clear on when you will reach them. This way you will be more focused and give yourself a better chance of success.
Budget, budget, budget
I’m not a fan of the “b” word, but your budget is the foundation that will determine how quickly you reach your debt goals. Take the time to plan what expenses you want to incur and make sure you have enough savings left to meet your mortgage goals.
Build your dream team
When it comes to ownership and debt, having the right people in your area will make a big difference in how quickly you move forward.
A good mortgage broker can help you refinance and make sure you get the best deal. A good financial advisor can help you set your goals and put in place tax-efficient strategies to pay off your mortgage faster and easier. And a good accountability partner can help keep you motivated and on track.
When choosing your dream team, you’ll want to know that they’ve been where you are before so they know what they’re talking about. In addition, if you use a professional, be careful of conflicts of interest to avoid any influence on his advice.
Paying off your mortgage is one of the building blocks of real financial success. Along with the peace of mind and confidence that comes from knowing you have no debt, eliminating your mortgage will free up more money than you can use to build your wealth.
It’s no small feat, but the juice is worth it. Be smart, stay consistent, and take action – and you will go a long way in shaping your financial future.
If you want your next money transfer to be easy, check out the Six Week Free Cashed Up Challenge at news.com.au – where you’ll get my top tips and tricks for saving more money faster, then learn how. work your money harder for you.
Ben Nash is a financial expert, commentator, podcaster, financial advisor, founder of Pivot Wealth, author of Amazon bestselling Get Unstuck: Your Guide To Create A Life Not Limited By Money.
Disclaimer: The information in this article is general in nature and does not take into account your personal goals, financial situation or needs. Therefore, you should determine whether the information is appropriate for your situation before acting on it and, if so, seek the advice of a financial professional.