Three more tips to pay your debt off faster

Continuing from last month, here are our next three tips to pay your debt off faster.  These aren’t presented in any particular order because everyone’s situation is unique.  Just take the ones that work best for you and if you’ve got any questions, feel free to reach out to us, or ask your financial or mortgage adviser.

1. Go hard, go fast

So you’ve just moved into your new home or put a tenant into your investment property – it’s time to celebrate a major milestone in your financial life!  But once the celebrations are over, know that the more you pay off your loan in those early years will have an exponential impact on how long it will take to pay your debt off.  If you’re buying your first home and expect to have children within the next few years, now is the time to go hard and make a dent in your loan.

2. Don’t be complacent

Everything in life takes effort, and your home loan is no exception.  Keep hassling your mortgage broker every year if they know of a better rate (in truth, they should be calling you, but not all brokers are created equal).  Call your bank and see if they can shave the rate.  Consider using a home loan linked credit card instead of one where you’re paying an annual fee.  Chances are you’ll find ways to save a few hundred dollars or possibly more.  If you consider the impact of this over a 25-year time frame, it will make a significant difference.

3. Steal your children’s presents! 

It’s common for children to be gifted money.  While it’s nice to see a bit of money build up in your children’s name, the reality is that it doesn’t pay that well.  Children have a tax free threshold of only $416.  They then pay 68% tax on earnings up to $1,307 and then 47% on earnings above that.  If you consider that the 4-5% you’re paying on your home loan is a tax free saving, it make sense to redirect this money to pay the family home off.  Keep a ledger of your children’s contributions so that you can transfer it back to them when the time is appropriate.  But while you’ve got it, make it work!