Pay off your Mortgage, Faster

In a moment, some more Money Matters, but first

Balance

In recent times Fil and I have become re-enthused about our vegetable garden.

We have always been keen gardeners but years of low rainfall has been a challenge, and the vegie patch was one of the first casualties in our yard.

Maybe because of the excellent wet winter we have had, or maybe just because the time was ‘right’, we have rebuilt an area that we have cleared, composted and¬†fertilized, sown and is now jam- packed full of food we regularly pick and add to our menu.

It is neither time nor cost efficient doing this compared to buying the food, however it is just so rewarding for my soul.

Perhaps it’s an age thing, but I can’t wait for the weekend to get some dirt under my fingernails!

Do you enjoy gardening?

Best Regards

Maurice

Pay Off Your Mortgage, Faster

For most of us, our biggest debt is our home loan.

And with housing prices having increased dramatically over the last few years, there has been a corresponding increase in the amount that we have to borrow to achieve the Aussie home ownership dream.

Large mortgage repayments often mean there is not much left in the family budget for luxuries or investing.

By paying off your mortgage faster, you can free up some of your family cash flow earlier to enjoy, or invest for your and your Children’s future.

One simple method of paying off your mortgage faster, is to make repayments more often.

Many home loans are repaid progressively over 20 to 25 years, with repayments generally paid monthly.

The term of a housing loan can be significantly reduced by making fortnightly rather than monthly repayments.

For example. Suppose your home loan was $200,000 and the interest rate was 7%. If the loan term is 25 years, the monthly repayment (in arrears) will be $1413. Instead of making the monthly repayment, if you were to make a fortnightly repayment of 1/2 the monthly amount ($706-50), the loan would be paid off in 20.5 years – a saving of 4.5 years.

The savings arise for 2 reasons. Firstly, you are paying off some of the loan 2 weeks earlier and hence saving interest, and secondly because there are 26 fortnight’s in a year, you are actually repaying more annually that you would versus making monthly repayments.

Making repayments more regularly is one strategy you can use to pay off your debts faster. There are others. Talk to your bank or credit union to see how else they can help you become debt free.

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This article is general in nature only and does not constitute or convey specific or professional advice. Formal advice tailored to your specific circumstances should be sought before acting in any of the areas discussed.