How to pay off your mortgage in 10 years

By Cam McLellan | 11 Dec 2019

When I first started investing, I was going along to a lot of seminars and spruiker sessions, and what I found the majority of these sessions, and the presenters of these sessions, were trying to appeal to people who wanted hugely glamorous lifestyles. They were promoting huge houses and boats and Ferraris and all the bling.

What I found a disjointed connection with those presenters was, while I took some of the information and built my own investment arsenal, what I really wanted was probably in line with the majority of Australians: I wanted security … to pay my own home off in a much shorter space of time than the average person, and to have a nest egg to provide an environment for my kids that I could comfortably live out retirement with them. It wasn't all about the bling for me.

What I want to go through here is a very quick example of how I can save you 20 years of work. Hopefully that gives you some value.

So, if we're looking to pay our own home off in 10 years, not 30, which is the objective of this exercise. I'll use some round numbers. Obviously, the numbers won't be as neat as this, but for the example, just to keep things, let's say we have our own home. We'll say our own home has a value of 500,000, and it has a loan attached to it of 500,000. All that's required to pay off this in 10 years and not 30 is to buy two very well-chosen investment properties. I will highlight they need to be well chosen.

So, if we buy two more investment properties, both with similar values, we've got, we'll say, an overall portfolio of 1.5 million, and we'll say that the loan's 1.5 million for ease. All that's required is to hold these two investment properties. Now, if well-chosen investments double in value every seven to 10 years, what we need to do is hold these investments for a 10-year period. In effect, their value going from $1 million to $2 million. Now, what's required to pay off this $1.5 million debt is to sell down on the $2 million, which will leave us ... the government likes their slice of capital gains tax, so they're going to want $250,000, which leaves us $1.75 million left over.

What's required? So obviously to pay out this debt here, which leaves us $250K. So, we've purchased our own home, to summarise. We bought two well-chosen properties and held them for a 10-year period. Their value's gone from $1 million collectively to $2 million. We then sell those, pay 250K capital gains tax to the government, leaving us 1.75 million. After we've paid out the overall debt of 1.5 million, we're left with $250,000 in our bank. So hopefully that saves you 20 years of your alarm clock going off.

Cheers, guys.

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Director of OpenCorp, Cam McLellan is committed to sharing his passion and property investment knowledge with everyday Australians.
Cam started investing in real estate at a young age and quickly mastered the art of building sustainable wealth. He has used the same wealth building strategy to develop a multi-million dollar business, sharing his knowledge and skill with ordinary Australians. Cam has personally bought, sold and developed numerous properties and has an extensive residential and commercial investment portfolio.

Read more Expert Advice from Cam here!

Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.

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