A plan for extra mortgage repayments is non negotiable [explainer + case study]
Making extra mortgage repayments to fast track your home loan down to zero is the single biggest action you can take towards becoming wealthier, sooner.
There is a wise Chinese proverb that says..
‘The best time to plant a tree was 20 years ago. The second best time is now’.
You should always be making extra repayments on your home loan, so you are repaying more than your minimum loan repayment – even if it is just $20 a week.
As the proverb implies, if you already have a home loan and have not started making extra mortgage repayments – then start today.
I think this is a non negotiable commitment – and more importantly, if you feel you CAN’T afford this then perhaps you’re not ready to get a home loan in the first place?
Remember that little steps in the right direction over time make a BIG difference.
Just like running a marathon.
And paying off a home loan is marathon – not a sprint.
CASE STUDY: How much of a difference do extra home loan repayments actually make?
Well a lot actually.
In the table below, you can see the home loan and interest rate for one of my clients who bought their first home.
If they just paid the minimum loan repayment each week of $511, the loan would take 30 years to pay off.
Actually, all home loans are set up as a standard by banks to be paid off over 30 years as it means greater profits for them.
Over the 30 years, these clients would pay $345,860 in interest repayments to the bank – this is a HUGE amount of money, wouldn’t you agree?
If instead they made extra mortgage repayments of $20 a week (so repayments are $531), consistently, every week for the life of their home loan:
- This would save them $29,003 in interest repayments;
- They would pay off their home loan 2 years and 2 months sooner – in 27.8 years (instead of 30).
If they received a pay rise and cut down on their expenses, so they could afford an extra mortgage repayment of $200 a week (so repayments are $711), consistently, every week for the life of their home loan:
- This would save them $162,352 in interest repaid;
- They would repay their home loan off 12 years and 9 months earlier – in 17 years and 3 months.
A saving of $162,352 is a huge amount of money, by anyone’s standard. How long would it take you to save this amount? You could pay for your children’s schooling, buy an investment property or take a lot of time off work with this saving!
Can you see now why making extra mortgage repayments will quickly make a huge difference to how wealthy you are in the future?
If you desire financial freedom later in life (aka live and spend freely), then make the commitment now, while you are young, to reduce your home loan as much as possible.
It is why every client I work with receives their own personal plan to repay their mortgage, faster .
If you would like a free 15min strategy call to talk about your personal financial circumstances and how you could pay your home loan sooner, then please book a call with me here.
My advice: always make extra mortgage repayments so you repay more than the minimum monthly home loan repayment. Even better, have a plan to pay it off in 15 years or less.