Expert advice with Philippe Brach 13/01/2017
Paying off a mortgage as quickly as possible reaps many benefits – hundreds of thousands of them, actually!

By being money-smart, everyone can find ways to add ‘bonus money’ to a loan. By leveraging some simple savings strategies you can reduce the term of the loan and the interest you’ll pay, which may result in savings worth five or six figures.

These 5 easy steps will show you how a little can go a long way:


  1. Reduce overspending.
We all do it. Unplanned purchases and impulse buying can seriously affect your financial health. Just by simply preparing a budget shows how much can be saved with a little planning. However, when creating your budget, be realistic, allow yourself some treats but once you’ve set it in place stick to it.


One of the most common overspending areas relates to services offered when we are short of time.So, for example, many of us rush off to work, buying food along the route, without considering what is already in the pantry/fridge at home.We pay inflated prices for takeaway lunches, pre-packages dinners and, of course, the coffee we can’t live without – adding a cake or pastry! So, set limits on your spending and put the additional savings towards your loan repayments.


  • You have a 30-year loan of $450,000 with repayments of $2400 a month at 5% interest. If you add just $100 a month to your repayments, you’ll save $40,000 in interest and shave over two and a half years off the loan.*
  1. Pay lump sums off your mortgage.
Instead of pocketing your tax return or work bonus, consider putting it directly against your mortgage. Every dollar over the repayment amount bites into your principal, which reduces the interest payable over the term of the loan.


Example: If you borrowed $350,000 over 30 years, at 5% interest, and threw in your $2000 tax return refund five years into the loan term, you’ll save almost $5000 in interest*. Imagine if you did that with every tax return, every year?


  1. Don’t be complacent about direct debits and insurances
Companies rely on our complacency. They want us to keep renewing insurances and subscriptions without shopping around for a better deal. Every year, do a health check of your insurances, including car, home and health, and promptly cancel subscriptions you don’t use. A long-forgotten gym membership can cost $70 a month!


And don’t forget to check your current loan/mortgage rate. Banks are very competitive these days, they are all vying for your business and there are some excellent deals to be had.So, if you haven’t check your rate for a couple of years you may be paying over the odds.Far better to either negotiate a lower rate or change to lenders who offer better terms, pay the same amount and reduce that loan more quickly.


Example: You do some research on your car insurance and find a company that provides the same service for a cheaper price, and also have a $100 cashback deal for new customers. Make the switch and add your yearly savings and the $100 cashback to your mortgage for a small but effective boost to your repayment strategy.


  1. Sell it rather than dump it.
With online selling now the norm, there’s no excuse for throwing out an old couch or TV. Take some photos, put it up for sale on online garage sale sites like Gumtree or eBay, and make a little bit of extra cash to throw onto your loan.


Example: If you’re doing a kitchen makeover put all the original appliances and fittings up for sale. There are plenty of people looking for a used fridge, oven, stovetop, rangehood, or dishwasher. Even cupboard doors or old benchtops can fetch a price. Your trash is someone else’s treasure, and they’ll be happy to take it off your hands and put some money in your pocket.


  1. Stamp out your debt.
Debt kills your financial momentum. While you may be paying 5% interest on your home loan, you could be forking out up to 20% on your credit card or car loan.


Forget extra repayments on your low-interest mortgage until you’ve stamped out your high-interest debt – and once that liability is gone, you’ll have a ton of extra money to throw onto your mortgage every month.


  • You have a 7-year car loan of $11,000 at 15% interest, with repayments of $50 a week. Ultimately, you’ll pay $18,622 for your car. If you can pay off your debt sooner, not only will you save money on a depreciating item, you’ll also have $50 extra a week to throw onto your loan/mortgage.

* Savings calculated at InfoChoice’s extra payment calculator.



Philippe BrachPhilippe Brach is CEO of Multifocus Properties & Finance. He has over 15 years experience in property investment and has helped many first time and experienced investors achieve their goals. He is also the well-recognised author of the book ‘Creating Property Wealth in any Market’ which lays out in detail what it means to invest in property.

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