Pay off your mortgage Quickly
- Thread starter JulieW
- Start date
Within 4 min says paid off house under 3 years and at 4 min 40 says he had " a 6 digit figure sitting in offset account".His story is not the majorities reality.
Needless to say didn't watch past 4min 50.
^^^He didn't say he started with 6 figures in offset, only that he had it at one stage. How else would he pay off his mortgage quickly, than by paying extra into it? Whether it's in offset or redraw, it's all about reducing interest payable.
That doesn't mean it's easy for everyone to pay off their mortgage in three years, but you don't have to be from a privileged background to have a good amount of cash available in offset.
My mortgage has a decent amount in redraw largely because I was not required to put up a deposit due to equity held by another person. Neither of us is rich, in fact we bought together because we couldn't afford to by what we needed alone. She still owns the 2-bed unit where she was bringing up 4 kids, which simplified the financials somewhat. But we both have plenty of debt.
Everyone's story is different.
That doesn't mean it's easy for everyone to pay off their mortgage in three years, but you don't have to be from a privileged background to have a good amount of cash available in offset.
My mortgage has a decent amount in redraw largely because I was not required to put up a deposit due to equity held by another person. Neither of us is rich, in fact we bought together because we couldn't afford to by what we needed alone. She still owns the 2-bed unit where she was bringing up 4 kids, which simplified the financials somewhat. But we both have plenty of debt.
Everyone's story is different.
HoldMeTender said:
Im not arguing the theory of an offset (nor did I say he started with 6 digits so no idea where you got that from), I am merely proposing that an amount of 6 digits in an offset for an average person within 3 years is not realistic for the vast majority yet his comment on this is almost off the cuff like "meh its nothing"
Stoic Phoenix said:
Sure mate, sorry if I put words in your mouth, I just meant: of course he accumulated a substantial redraw.
I agree the average person can't pay off their mortgage in 3 years, I sure as hell would struggle to do that, but I do believe most mortgagees could get ahead a lot more quickly than they imagine. Most of us aren't cut out for the kind of obsessive focus old mate in the video displayed, but getting empowered and making it a priority to reduce debt are within everyone's reach. Things like: using a credit card to spend interest free while your salary sits in redraw, taking a knife to expenses, depositing any lump sums available (the single most effective strategy), supplementing income, renting/AirB&B'ing a room, taking the bus, throwing any windfall dollars into the loan - it's not fancy but it works a lot better than paying the minimum repayment and wondering why it's taking so long to pay off the house.
A lot of people have a somewhat defeatist approach to the whole thing ("I'm stuck with it for 30 years..") and anything that motivates them to attack it head-on is a positive in my eyes. I bet most average single people or dual-income families could make extra repayments in excess of $10k annually by using their heads and reining in costs.
And if it's only $2k it still has a lovely tax-free compounding effect
SilverDJ
Well-Known Member
HoldMeTender said:
It's not really about paying it off in X years, it's about doing the hard yards in the first few years to really get the principal down. Foregoing expensive holidays, 5 coffees a day, meals out every week, and frivolous stuff etc. Just pour every cent into the loan.
Nothing else will give you a better guaranteed return on every cent than your home loan.
And if you don't have an offset account or redraw facility, then you are doing it wrong.
SilverDJ
Well-Known Member
HoldMeTender said:
I know so many people like this, and it's hard to convince them of the positive benefits.
Had a friend tell me about 10 years ago, who started in almost the exact debt/income as us "why bother paying off your house early? What are you going to do with the money?"
I went through the math and explained that once I paid off my house, or most of it, I could take a world trip every year for the rest of my life with the money I saved in interest, whilst he couldn't. He still didn't get it.
Now 10 years later, he's still massively in debt, whilst we payed ours off years ago, and has now realised it was a foolish attitude.
BTW, we even took a world trip in that time, because going mad paying off for the first few years really paid huge benefits.
SilverDJ
Well-Known Member
Another thing to do is sell everything you don't use regularly. Ebay or gumtree it.
The amount of crap most people buy and then don't use any more is staggering. I'd be surprised if every household couldn't find a few grand worth of stuff to sell they don't use any more.
The amount of crap most people buy and then don't use any more is staggering. I'd be surprised if every household couldn't find a few grand worth of stuff to sell they don't use any more.
Doesnt everyone with spare money already do this?
In the late 80,s I started paying my first ever mortgage weekly on advise from an almost non english speaking polish guy I met who couldnt practice accountancy in Australia because of language barrier,anyway the bank tried their best to stop me paying my mortgage weekly which was unheard of then although now popular!
I actually demanded my mortgage be taken out of my acc daily to off set mortgage interest they charged daily but the bank ANZ refused citing too much paper work. so I started my own mortgage weekly off set account and paid off my mortgage in just over 3 years.
Who doesnt know this already?
In the late 80,s I started paying my first ever mortgage weekly on advise from an almost non english speaking polish guy I met who couldnt practice accountancy in Australia because of language barrier,anyway the bank tried their best to stop me paying my mortgage weekly which was unheard of then although now popular!
I actually demanded my mortgage be taken out of my acc daily to off set mortgage interest they charged daily but the bank ANZ refused citing too much paper work. so I started my own mortgage weekly off set account and paid off my mortgage in just over 3 years.
Who doesnt know this already?
^^ Well there would be some interest saving even if not much, but if you pay $500 weekly it quickly gains momentum.
That was one of the old tricks, now with offsets etc it's even easier to save on interest. My lender conveniently offers this sort of advice on their website. The mortgage market is very different now compared to 20 or 30 years ago.
That was one of the old tricks, now with offsets etc it's even easier to save on interest. My lender conveniently offers this sort of advice on their website. The mortgage market is very different now compared to 20 or 30 years ago.
I agree, 3 years is not realistic for most people. No-one said the guy in the video is 'average,' personally I think he came across as a bit of a dick. If he represented the average there would be no need for this discussion.. But saving literally hundreds of thousands in interest is, I think, possible in many cases.
Not if you are overcapitalised, granted. Not if private school tuition is a higher priority, granted. Not if you prefer to buy Big Boy Toys or stack shiny bullion (sorry!).
But as I said above, finding $10 to 20k/yr is realistic for many people and that could bring the mortgage term down by many years and maybe halve the interest bill.
I think we all agree housing prices are a bitch in this country and a 30yr mortgage is a millstone none of us desires.. Who else has suggestions we can use to get it paid off sooner?
Not if you are overcapitalised, granted. Not if private school tuition is a higher priority, granted. Not if you prefer to buy Big Boy Toys or stack shiny bullion (sorry!).
But as I said above, finding $10 to 20k/yr is realistic for many people and that could bring the mortgage term down by many years and maybe halve the interest bill.
I think we all agree housing prices are a bitch in this country and a 30yr mortgage is a millstone none of us desires.. Who else has suggestions we can use to get it paid off sooner?
HoldMeTender said:
Generally reducing the principal is the fastest way to pay off loan. If you look at mortgage calculation charts you see how large portion of repayments are going to payoff interest debt and just minutely chipping away at the principal. It's the same as credit card minimum payment ruse.
The borrowed amount nearly doubles over 30 years of fixed repayments. So the more you can BUDGET to put towards the mortgage above given repayments the faster you'll pay off your mortgage.