How To Pay Your Mortgage Off Faster

Posted by Andrew Nicol on 06/03/18
Pay Your Mortgage Faster

Being mortgage-free is the dream for many kiwis. But when your mortgage is high, getting to a point when it’s paid off feels like an impossible dream.

But it doesn’t have to be. Kiwi families are finding inventive ways to pay down their mortgage, saving them years of being tied to the bank, and tens of thousands of dollars in interest.

You’ll be surprised how much you can do, even on a limited budget. We asked some of our mortgage-free clients for some tips on how they paid down their mortgages sooner.

1. Switch to weekly or fortnightly payments

Here’s a little tip: if you switch your mortgage from a monthly payment to a fortnightly or weekly payment, you’ll actually end up making a couple more payments each year, automatically shaving a few years off your total.

Some of our clients also like weekly payments because making incremental increases feels more manageable. For example, Increasing your weekly payment from $500 to $550 per week seems like less than increasing a monthly payment from $2000 to $2200.

2. A little can really add up

If you’re serious about paying off the mortgage, then don’t overlook the benefit of little savings adding up over time. Try skipping the morning coffee, bringing your lunch from home, or trying free local community activities on the weekends instead of expensive dinners out. You might be surprised at how much you can save with simple changes.

One client of ours takes all the uneven amounts in her bank accounts and rounds them down each day to multiples of $5, transferring the dollars and cents to her mortgage account. So if her checking account has $27.21 in it, she’ll transfer $2.21 into her mortgage account to make it $25. Just doing this has enabled her to pay off an addition $5k off her mortgage in 2017, saving her 4 years and $21,000 off her loan.

If you share the mortgage with a partner, relative, or roommate, start a friendly competition to see how can shave the most from their weekly budget.

3. Save your change

How often do you receive change after making a purchase? Most people just throw their coins on the floor of the car and forget about them.

Instead, save your coins in a container in the car or at the office. Once that container gets full, transfer your coins to a large money box or jar. As soon as that gets full, take it into the bank to deposit on your home loan – you might be surprised to discover hundreds or thousands of dollars in small change!

4. Play with the numbers

Did you know that an investment property could help you get mortgage free faster?

Use our mortgage calculator to run different scenarios and find out exactly how quickly you could pay off your home with an investment property.

To use this calculator, type in your current mortgage amount, rate, and repayments. Then, look at the potential numbers for an investment property, and watch your mortgage numbers change dramatically!

Are you ready to make a serious effort to get your mortgage paid off sooner? Give these techniques a try, and don’t forget to check out the free mortgage calculator.