My wife laughed when she first saw this as it was assumed I was trying to give relationship advice. Well clearly I am, advice relating to our beast of a mortgage. It’s the annoying third wheel in our relationship, forcing us to make decisions we don’t often like. Some days I want to get physical with our mortgage and other days I just want to run away. Sadly, it’s looking like a long term thing, but there are simple steps we can all use to speed up that much needed break up with the beast.
If you have a beast of a mortgage, it’s likely that by following these 5 steps you can save yourself hundreds of thousands of dollars ($$) and achieve an earlier break up!
1. You really need to keep on top of your mortgage costs. There is no loyalty out there and once you’re a customer, the lender somewhat forgets about you in their pursuit of the next “you”. You can and should know what is being offered to new customers in the lending market and negotiate with your lender so you too get the lowest cost loan. Get educated, then simply pick up the phone and call them. It really does work as we do it all the time with our clients. A 20 minute phone call could return you thousands of dollars in savings. If your lender won’t play ball, consider your re-financing options.
2. If you look to refinance, you need to find a finance guy who will rebate/return all the commissions back to you. There’s a big upfront commission rebate on offer and then smaller commission rebates each and every month for the life of the loan. These rebates will put a significant dent in your beast and potentially bring forward your break up date by a few years. We think this is a no brainer…
3. It can make sense to attach a full offset account to your beast. Think of this like a leash, where the more money you can have sitting in the offset account, the more you can use to control the beast and reduce the pain (cost $$) being inflicted. Every dollar sitting in your offset account is a dollar you are not being charged interest on. Now this is not a war winner, but its easy and it will more often than not provide you with better bang for buck than any alternative place for your short-term money.
4. If you get paid fortnightly, why not pay your mortgage fortnightly. What this does is actually make an additional payment each & every year (26 fortnights versus 12 months). This extra payment will make a significant impact and potentially bring forward your break up by a few years.
5. Be conscious of your spending (yes I know…zzz’s). But if you really want to tame the beast, you need to be disciplined and perhaps acknowledge that some of your spending needs to be redirected simply because you need to prioritise things. This isn’t about being a tight arse, more so being smart with your money. Cut Foxtel for Netflix, skip breakfast out and replace it with coffee out… there’s plenty of scope here to save and redeploy cash to taming your beast.
FACT: You will pay hundreds of thousands of dollars in costs on the average size mortgage over a standard 30 year loan term. If you follow the above steps, you will save yourself a lot of money and become financially secure quicker than many others. Surveys reveal the beast is our biggest financial pain point. These steps are not too difficult if you take the time and be somewhat disciplined.
FACT: We are clearly not relationship counsellors, however we’re Independent Financial Planners & Independent Mortgage Brokers who give a you know what. Your agenda is our agenda!