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.
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We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians
Your email address will be shared with nestegg and subject to our Privacy Policy
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