A financial advisor who recently moved into a new home in Sydney’s eastern suburbs with her young family has revealed the five things she and her partner are doing to pay off their mortgage in 15 years, after the bank recommended a 30-year term.
Canna Campbell explained that it is ‘absolute madness’ to take 30 years to completely pay off your home loan, as it is unlikely you will have the ‘same levels of energy and enthusiasm to be working at the same capacity’.
Instead, you need to capitalise when you’re younger and working in order to get on top of your mortgage.
Canna and Tom explained they are doing five specific things to pay off their mortgage in 15 years, as opposed to the suggested 30. So what are they?
Scroll down for video
A financial advisor who recently moved into a new home in Sydney’s eastern suburbs with her young family has revealed the five things she and her partner are doing to pay off their mortgage in 15 years (Canna pictured with her baby)
Canna (pictured) said you need to capitalise on paying off your mortgage as quickly as possible while you are young
1. They set a goal together
One of the first things the couple said they did when they moved into their new home in Tamarama was sit down and figure out their goal.
‘We decided between the two of us that we wanted to have the best go possible at trying to pay off our mortgage within 15-20 years,’ Canna said in a YouTube video.
The financial advisor said there is ‘no way’ you should let the bank ‘prescribe’ how and when you are going to pay off your mortgage, and instead you should set your own path.
‘We are determined to put in the hard yards earlier in life because this is when you can have the biggest and best impact quickly,’ Canna said.
2. They reviewed the family budget
Once the couple had a plan in place, Canna explained that she and Tom went through their family budget and tweaked it to maximise their payments.
‘We agreed on a few little changes here and there to allow us to make the maximum possible mortgage repayment we can make, while still allowing some balance in our life,’ Canna said.
This meant they increased their mortgage repayment so that it is automatically paid every month at an increased amount, without them even thinking about it.
3. They looked around for the best interest rate possible
Canna’s third tip takes a bit of time, but she promises it is well worth it.
The financial advisor said she and Tom looked around for the best interest rate possible.
‘And while this did involve switching loan providers, the interest savings were well worth gathering all the paper,’ she said.
After setting a goal to pay off their mortgage in 15 years, Canna (pictured) said she and her husband went through the family budget and made tweaks
4. They found side hustles to drum up extra income
While it might seem unappealing, it’s the extra income or ‘side hustles’ which can really save and make you money when you’re trying to pay off your home loan.
‘We agreed that because we wanted to cut down our loan term by half that we would do additional things on an ad hoc basis where we could create extra money in our lives,’ Canna said.
Even if it’s just $100 or $200 here or $1,000 there, the financial advisor explained that everything adds up, and it’s a ‘really important habits system’ to create.
Whether it’s tutoring, selling old clothes, surveys or house-sitting, there are so many ways you can make extra money.
The final – and perhaps most important – thing Canna (pictured) said she and Tom are doing is they have parked their emergency savings in a re-draw/offset facility
5. Park your emergency savings in a re-draw or offset facility
The final – and perhaps most important – thing Canna said she and Tom are doing is they have parked their emergency savings in a re-draw/offset facility.
‘It is helpful because while it is sitting in the re-draw facility, we can still access that money any time we need to, but it’s helping us to save interest in the meantime,’ she said.
‘It means we are paying less interest over time and our mortgage repayments make a bigger dent in bringing down our home loan.’
Canna said she and Tom are allowing themselves little treats and ‘rewards’ along the way as they pay off their home loan, but often these are small while they stay focused on the top financial goal.
What are the benefits to paying off your home loan fast?
1. It frees up your cash flow: When you pay off your home loan, your cash flow is freed up much more, meaning you have more money to spend on experiences, like holidays. Canna said this is one of the best benefits as you actually have the choice as you have to spend your disposable income.
2. You have more financial security: You can build up more emergency savings once it’s paid off, so that if anything happens to your family or your work, you have plenty of money set aside to keep you going financially.
3. It gives you more choices: Paying off your home loan quickly means you have more choices with how to spend your time, whether it’s cutting down to part-time work or taking a year off to travel around the world.
4. It allows you to invest: Once you’ve paid off your home loan, you can use all of that cash flow that was going to interest to getting more financial security in your life. It is always a good idea to diversify outside of your home.
5. It allows you an earlier retirement: Finally, paying off your home loan could mean a potentially earlier retirement. You could look at a more aggressive salary sacrifice or extra contributions to your superannuation each year. The more cash you have in your super, the earlier and more luxurious your retirement will be.