Thinking creatively helped Peter Horsfield and wife Roz pay off the mortgage on their Sydney home in just seven years. The young couple was keen to get the mortgage monkey off their backs as soon as possible.
“Being under 30 and having a $600,000 mortgage and being newly married was a fairly freaky kind of experience,” says Horsfield, a financial planner.
So after a year, they rented out their furnished three-bedroom apartment to executive clients for $1200 a week. Meanwhile they moved into a one-bedroom apartment in the same block, paying about $450 a week in rent.
They also set strict savings goals, invested in study to improve their salaries and ploughed any bonuses or extra money into the mortgage until it disappeared.
Horsfield said the strategy worked so well that they did it again with a second property.
“It’s a wonderful feeling – it just opens the door to other opportunities,” says Horsfield.
Sharon Walker, a financial planner with NAB, says there are plenty of easy strategies you can use to pay off your mortgage quick-sticks.
First, complete a budget so you know where your money is being spent, says Walker.
Next, change any monthly payments to fortnightly, a simple move that could potentially save you tens of thousands of dollars.
“The other thing I suggest is to round up the repayment. For example, if you’re paying $564 a fortnight, increase that to $570 or $600 depending on your affordability,” says Walker.
“Over time, even a little bit extra every fortnight makes a huge difference.” Walker suggests using a money calculator to work out how much you’ll be paying in interest over the life of your loan.
“That can give you a little bit of a shock and motivate action,” she says.