How to get ahead on your mortgage

Lookingaftermycents

If there is anything that 2020 has taught me, “it’s hope for the best but prepare for the worst!” Yes, that’s exactly it! After all, paying down your mortgage is definitely a huge step in the right direction to prepare for when the sh!t hits the fan, as they say!

In March 2016, we purchased a pretty standard double brick, 4 bedrooms, one bathroom home in the suburbs of Perth, Western Australia. The housing market at the time was on the way down but was yet to reach rock bottom. If we were to sell today, we would lose about $60,000 plus all of the interest we have paid to the bank over the past 4 years. That is why one of our main goals is to pay it down ASAP and hope the market recovers over the next 6 years when we will be ready to sell.

The interest is the kicker for me; the less we can pay, the better! I feel that is something that people forget about when they say, “We have sold our home, and it made $20,000 on it” mmm, did you? I am sorry to sound like Debbie Downer, but how much interest did you have to pay while you had the mortgage? Did your lender gobble up all of your creams?

I like to keep motivated while tackling this huge task to work out how much interest is charged per day on loan. I have found the monthly amount that gets charged on the statement is huge, so I take the number and divide it by the number of days in the month, and I write it down .... EVERY month. This now turns a $754.35 elephant into a $24.35 chewable chunk! It is much easier to find $24.35 to add to the mortgage a day then find another $754.35 somewhere in the budget. Putting those small amounts into the Mortgage Repayments regularly really makes a difference. I also track the loan's balance as it goes down in a self-made coloring in the chart. It lives on the fridge to remind me every day of the progress we are making.

Are you thinking you might also like to pay your mortgage, but you are not sure you have any extra dollars in the budget to allocate to it? You don’t have to be adding thousands or even hundreds of dollars extra to a monthly repayment to really make a difference. I will list a few quick and simple things we do below that save us thousands in interest and get us to our goals in record timing.


Repayments - Updating our monthly mortgage payments to a weekly payment.

Wage Cream – Each time we get paid our wages, I work out the budget to the nearest whole hundred or tens, i.e., if I was paid $764.00 then I would ensure to allocate the budget up to $700 or $750 then the rest is cream $64 or $14, and I pay it straight off the mortgage.

Cleaning Accounts – Once or twice a week, I will go into our spending accounts and move the ‘untidy’ amount in there to make it a clean number, i.e., the balance may be  $109.87. I will transfer $9.87 to the mortgage. You can choose whatever you are comfortable with here .. it all adds up so quickly.

Side Hustle - Any side hustle money I make gets placed onto the mortgage as soon as I make it, so we don’t spend it on other things. A couple of my favorite ones are selling unwanted goods, baking treats to sell to friends at work, and completing mini mystery shopping tasks through app’s like Smart Spotter and Field Agent.  

Off-Set account – Our bank offers an off-set account that links to our mortgage, it means that our savings and emergency funds can sit in the bank accessible for when we need them but be applied to the balance of our mortgage, off-setting the amount we owe and reducing the principal. This is currently saving us just over $100 a month in interest that is not being charged.

There you have it, that I just a few simple ways we are paying our mortgage down faster and helping us prepare for those harder times in life when the last thing you want to be worried about is the roof over your head.


Have a great day

Ems @lookingaftermycents

Disclaimer: The author is not a financial advisor and the information provided is general in nature and was prepared for information purposes only. This article should not be considered to constitute financial advice. Accordingly, reliance should not be placed on this article as the basis for making an investment, financial or other decision. This information does not take into account your investment objectives, particular needs or financial situation.

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