Many of us are aware of the path most traveled and It’s rare to speak with a mortgagee who isn’t paying more frequently, and in addition, paying more often.
It’s common to hear stories of people who have coupled the above with effective offset, line of credit and redraw facilities that work even further to limit interest exposure over the term of a loan.
What you won’t hear is:
“Is there anything else I can be doing to reduce my mortgage faster than what I already am?”
Within all of us there is a level of “she’ll be right-ism”. After working a 10-hour day, coupled with more than an hour of commuting and our responsibilities at home it’s difficult to find the energy to attack our loan structures with as much gusto as we’d like.
Unfortunately for those of us graced with a mortgage, it’s this end of day exhaustion that results in paying almost double your home’s value for the sake of owning a home.
For those of us who want to know how we can own our homes in the shortest possible time we’ve put together five tips to ensure you’re a cost-effective home owner.
1. Ask as many questions as you can about your mortgage structure and interest exposure
Depending on who you speak to for financial guidance it will always pay dividends to know as much as possible about your mortgage. If you’ve considered evaluating an existing mortgage or if you’re considering engaging in your first, write down a list of questions you’d like answered and don’t stop asking until you have a full understanding.
2. Remain active in evaluating your current structure
This is a hard tip to follow however it’s the most important. Your bank is not going to call you and offer you a better mortgage structure or a lower interest rate and you will struggle to save unless you take an active interest in reducing your debt. It’s always good to schedule a recurring time that you make available to review your mortgage and engage in appropriate lines of inquiry
3. Don’t settle for less than what you expected
In an age where many promise the moon however only deliver cheese, if you’ve been reassured you will achieve a certain type, timeframe or level of saving… Don’t settle for less! If you have committed income, time and thought into a new structure and after reviewing its progress you feel it is not achieving the outcomes you expected its time to go back to the source and question why! While it may be time consuming to follow up, it will cost more in the long run if you don’t.
4. Consider if you’re sacrificing too much of your own lifestyle in favour of battling your mortgage
It is difficult to establish a work life balance and nothing could be truer of establishing a mortgage vs cost balance. While paying more than what is required is a very effective method of reducing a mortgage and the interest payable, you are committing to short changing your lifestyle of the foreseeable future. The best type of reduction you can achieve is one that saves a considerable amount of time and allows you to regain a considerable quality of life.
5. Life happens to everyone
Having a solid plan will never go astray in understanding that life and the world we live in is in a constant state of change. Our incomes will fluctuate, our jobs will change, our locations will change and our requirements for day to day living will change. A constant that will not change for mortgagee’s is that repayments will need to be made and to do so we will need after tax dollars to do so.
As they say “Proper preparation and planning will prevent poor performance”.
Take the time to consider all eventualities and ensure that you’ve taken all steps required to protect yourself when these changes do occur.
At times a mortgage can feel like a great mountain to scale, however, with a little effort your mountain may only be a molehill once you have the most appropriate structure that supports you, your family and your goals.