Simple tricks to get out of debt sooner

By

March 02 2020
Share

For most Australians, their financial futures are tied to the family home, yet few look into ways to pay off their home loan sooner, suggests an industry expert.

In a conversation with nestegg, Athena’s CEO and co-founder, Nathan Walsh, revealed the problem Australians are having with debt and how they can get out of debt faster.

“It’s a sad story where household debt has grown by three times over the last 20 years. And it’s not that people can afford that home loans because interest rates are low. What it has meant is people are 10 years slower in paying off their loan than they were generations ago,” Mr Walsh explained.

With mortgage holders paying off debt slower than a generation ago, older Australians above 55 are still paying down debt during a time when they could be focusing on retirement savings, suggested Mr Walsh.

3 tips to pay off a mortgage sooner

To combat this, the mortgage provider highlighted the importance of paying just a couple of percentage points cheaper over the life of a loan.

“Someone on a typical loan of $400,000 with 25 years left to go, switching [to a better rate] would save $46,000 over the life of the loan,” Mr Walsh said.

The second tip Mr Walsh provided was getting consumers to switch from a monthly to a weekly or fortnightly payment, which will allow consumers to get out of debt on average two years and nine months sooner.

For mortgage holders with a typical loan amount, paying slightly more on their debt than the minimum requirements can make a lasting impact on their mortgage.

“If you will, just pay $40 a week extra over and above minimum payments that will grow to $81,000 and pay off your home loan over five years faster,” Mr Walsh said.

nestegg has previously discussed how effective property strategies can allow investors to pay off a mortgage in a decade.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

Most read

Age Pension increase prompts Australians to review their finances

Latest Podcast

Superannuation guarantee rate rises to 12 per cent as parental leave changes ...

Resources

There is $17.5 billion in lost and unclaimed super across ...

Borrow