Crush Your Mortgage
One of the biggest financial commitments most of us will ever make is the mortgage on our home. Because of its size, 6 changes can have huge impacts on your loan. So if you dream of living debt free, crushing your home loan is vital and we can help.
Steve and Nicole tackle their interest…
Steve and Nicole have a mortgage of $350,000 repayable over 30 years. With an initial interest rate of 4.50% and monthly repayments, they found they would be paying over $280K in interest over the period of the mortgage.
Option 1 ‐ By increasing their monthly payments by just $27 they could save over $10,000 and three months off the length of their loan.
Option 2 ‐ By renegotiating their interest rate to 4.25% they could save $18,000 over the term of the loan.
Option 3 ‐ By switching to fortnightly payments, they could save a whopping $50,000 over the time of the loan and have it paid off over four years early.
| Current Repayments | Option 1 – Monthly Increase | Option 2 – Renegotiated Rate | Option 3 – Fortnightly repayment | |
| Repayments | $1,773 | $1800 | $1,721 | $886 |
| Interest Saved | $0 | $10,000 | $18,000 | $50,000 |
| Time Saved | 0 years | 11 months | 0 years | 4 years |
Or invest your additional payments…
In the current low interest rate environment additional repayments may only achieve 6 savings in interest. Rather than make additional mortgage repayments, we explained to Steve and Nicole that they could maintain their existing repayments and invest excess funds in higher yielding assets such as shares. However, we clarified the higher level of risk involved in such investments.
Armed with this information, Steve and Nicole decided to play it safe. They changed their payment schedule to fortnightly and plan to apply any increased income from tax savings or salary increases in the future to the mortgage, reducing the outstanding capital amount as soon as possible. If you would like to discuss how to save on your mortgage, give us a call.