If someone told you that you could turn $5 a day into a nest egg of more than $100,000 over time, it would sound like a pretty good deal, right?
After all, most of us could spare $5 a day, even if it meant making your morning coffee every day instead of buying one. Or making your lunch to take to work every second day, instead of buying a more expensive meal every day.
And a reward of more than $100,000 would make that small sacrifice worth it, wouldn’t it?
The good news is that you can get that big reward if you just put an extra $5 a day into your mortgage instead. Let’s do the maths.
Example
According to the latest Australian Bureau of Statistics figures, the average Australian mortgage is about $350,000.If you borrow that amount on a standard 30-year team at an interest rate of 5%, your monthly repayments would be $1,879.
[1]
But if you could find an extra $5 a day and you added that to your monthly repayments, they would increase to $2,031.
If you did that, you would save yourself $57,962 in interest and pay off your home 4 years and 7 months sooner!
That’s great I can hear you say, but didn’t you say something about turning the $5 a day saving into more than $100,000 at the start of the article?
Here’s how you can do that.
Simply change your monthly repayments to fortnightly and make sure that you still increase them by the same daily $5 amount.
If you did that, you’d pay  $1,015.50 per fortnight instead of $2,031 per month. And the great news is that you’d save $101,507 in interest and you’d own your own home 8 years and two months sooner!
So, make sure you think about how a daily cup of coffee really costs you if you’ve got into that habit. Find that extra $5 a day to put on your mortgage and you’ll reap the rewards.
Other ways to pay off your home loan sooner
There are many other strategies you can use to
pay off your home loan sooner, like:
- setting up a mortgage offset account and ensuring your salary is paid into that account.
- making lump sum payments (for example, if you get a work bonus or a tax refund). Any payments you make in addition to your normal scheduled repayments come directly off the amount you owe on your home loan, which reduces your overall interest bill.
- refinancing to a loan with a lower interest rate.
How we can help
At Fast Repay Home Loan, we help our clients to implement strategies so they can become debt-free and own their own homes as soon as possible. We’ll take the time to understand your needs and goals so we can provide you with the best possible advice.
Call 1300 707 955 or email info@fastrepayhomeloan.com.au/backup to find out how we can help you, and to secure your free consultation with a finance expert.
[1] Source: https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/mortgage-calculator#!how-much-will-my-repayments-be
