It’s never too late to start a good financial plan for your life, but what if you set the wheels in motion in your mid-20s? In this new blog series, we ask the question: If I was 25 again I would…
…pay extra off my mortgage.
If I could find just $100 extra per month – less than the proverbial cup of coffee every day – and added this to my repayments on a $300,000 mortgage with an interest rate of 3.75% per annum over a term of 25 years, I would save $17,466 in interest, and shave more than two years off the term of the loan.
If I couldn’t make the extra payments regularly I’d aim to use any windfalls to pay down the loan. An additional $1,000 paid at the start of the same mortgage would save me $19,795 in interest over the term!
In practice, the easy way to do this is through a mortgage offset account. This would ensure all my savings, including the extra amounts I can find here and there, are working to reduce my total interest bill. And if interest rates rise, the savings will be magnified.
Like to know more? Contact one of our licensed financial advisers and we can work with you to develop a plan to suit your needs.