How Do I Pay My Mortgage Off Quicker?

Every situation is different so we would make suggestions based on your personal situation. First things first, negotiate the best rates possible which is something we do on a day to day basis!

A simple strategy is to pay more than the required minimum payment. You don’t need fancy gimmicks, software programs or unrealistic goal setting. However you do need to have achievable goals! Our knowledge of the market and negotiating skills will also get you the best deal to suit your situation. We can also help you understand how offset mortgages work.

Feel free to talk to us about how to make it affordable and simple to work. There are some Home Loan structures in the market and companies that try to make it sound like rocket science when really it doesn’t need to be. It does require some careful budgeting (and preferably some goal setting) and we can help with some budgeting spreadsheets on our calculator page. Compare loan terms and how much you could save using our simple excel calculator: WMB-Mortgage-Comparison-Calculator.xls (143KB).

This calculator shows you this split of principle and interest over the life of the loan when you punch in the relevant details: WMB-Loan-Amortisation-Calculator.xls (148KB). Paying even a small amount more can make a big difference. However don’t be afraid to start with the absolute minimum repayment/maximum term if that is what is required to get into a home. You can soon pay more off and quickly in the years to come.

We are not saying you should give up the small luxuries in life. Some companies will tell you to give up your daily latte and save thousands on your mortgage. While this may be technically true, if you are a coffee fan like me, it’s just not practical. You are better off doing things like taking your home made lunch to work, not buying a muffin with the coffee, making do with the clothes you have and having less dinners or big nights out.

If you get paid monthly, then it’s likely to be easier on you to pay monthly, if you get paid fortnightly then fortnightly repayments are best. If you have an interest only loan or revolving credit account then repayments will be monthly. The most common repayment system is fortnightly. If your bank or lender doesn’t have weekly payments and you get paid weekly, you may be able to have two loans and pay them on alternate fortnights.

An easy way to pay off your mortgage off quicker is take the minimum monthly payment: $200,000 at 8.2% over 30 years = $1496 per month If you divide $1496 by 2 = $748. If you choose to pay $748 per fortnight then the loan will be paid off in 26.9 years rather than 30 years! $1496 x 12 months = $17,952 repayments pa $748 x 26 fortnights = $19,448 repayments pa This would save you $57,245 in interest! Fortnightly repayments would be $690 on 30 year term.

Your bank will not automatically use this structure but rather just adjust payments so they still finish after 30 years regardless of whether they are weekly, fortnightly or monthly.

Other options include having a fixed portion and a small portion of the loan on floating. This allows lump sum payments to the floating portion with no penalty.

Alternatively if you do have spare cash, put it aside until the fixed rate expires and then make a lump sum payment at rate renewal time.

If you refix on to a cheaper interest rate than you are currently paying, keep repayments the same rather than dropping repayments in line with the cheaper interest rate. This will cut the term of your mortgage and save you in interest.

Want to learn how to maximise your repayments to save you the most money?

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