How To Pay Off Mortgages Fast: 4min Guide For Kiwis
Introduction: A Kiwi’s Roadmap To Pay Off Mortgages Faster!
If you’re here, you’re probably wondering things like “how quickly can I pay off my mortgage?” or “what if I can’t pay my mortgage?”. Well, ask and you shall receive! We’re about to dive into some strategies that could help you pay off that mortgage faster than you ever thought possible. Putting that cash back in your pocket rather than the banks! Winning!
What Banks Don’t Share About How To Pay Off Mortgages Quickly!
Banks, bless them, they’re not always chatty about the best strategies for paying off your mortgage quickly. Because at the end of the day, they don’t really want you to pay off mortgages quickly! They end up losing out on that extra cash from the loan’s interest! But don’t worry, we’re here to spill the beans – the secret sauce is revolving credit. It’s a bit like a secret recipe, handed down from generation to generation, except we’re handing it over to you right now.
How Quickly Can I Pay Off My Mortgage? Understanding Revolving Credit
If you have never heard of revolving credit before, you’re not alone! It’s actually really simple and super effective once you understand it! This financial strategy can be a legit game changer when it comes to paying off your mortgage quicker! The aim of revolving credit is to look after your money in a smarter and more efficient way. As a result, making your money work for you rather than you work for it!
So here’s the deal: when you earn your wage, instead of letting it sit in a low-interest savings account (aka your normal account), or spending it right away, you’re going to do something different! You can put it straight onto your variable home loan/mortgage. Doing this reduces the amount you owe straight away! Because of that, you have reduced the interest you’re charged. It’s like giving your mortgage a one-two punch before it even knows what’s hit it! Now your interest in your repayments are lower, keeping those dollary-doos in your pocket, not the bank’s.
But what about your day-to-day expenses, like the groceries, fuel and the beer at the pub? That’s where the credit card comes in. You use a credit card for your daily expenses, and the epic thing about it is that it’s interest-free for 30 days. It’s like getting a short-term loan without the interest.
The real magic happens just before the credit card is about to charge you interest. It’s automatically paid off from your home loan. So, you don’t pay any interest, and your mortgage interest gets a nice little reduction. The key part here to make the revolving credit is to make sure everything is paid-off on the credit card bill is paid-off on time prior to the interest rate getting charged! You don’t want to fall into a cycle of getting a credit card and racking up a whole bunch of charges and then hit with the extra interest! The goal here is the opposite! So setting up direct debit payments will be handy to avoid that from happening!
Here’s how revolving credit works:
- Your wage goes straight onto your variable home loan, reducing the amount you owe and the interest you’re charged.
- You use a credit card for your expenses, interest-free for 30 days.
- Just before the credit card charges you interest, it’s automatically paid off from your home loan. No interest to pay, and your mortgage gets a nice little reduction.
By using this revolving credit strategy, you’re basically making your money work harder for you, helping you pay off your mortgage faster. It’s a win-win situation! Less interest paid means more money in your wallet!
The Power Of Compound Interest: Is It Working For You Or Against You?
Compound interest can be tricky to get your head around! But it’s so important to understand if you want to pay off your mortgage faster. It’s totally like a snowball rolling down a hill, getting bigger as it goes down. Every day, the interest on your loan is calculated on what you still owe on the loan. This means that the interest you owe also earns interest! So the amount you owe can grow extremely quickly! Just like that snowball racing down a mountain and getting bigger!
But! When you use strategies like the revolving credit technique, you’re reducing the amount you owe each day! Which means there’s less interest to compound and more money in your pocket! It’s like stopping that snowball before it gets way too big. Or even stopping it from rolling down the big ol’ hill to begin with! You want compound interest to work for you, with your own savings, not with your debts! So by using these strategies, you can save a massive amount of money on your mortgage. Avoiding the situation where you can’t pay mortgage repayments!
Key points with compound interest:
- Compound interest is like a snowball rolling down a hill, getting bigger as it goes.
- By using the revolving credit technique, you’re reducing the amount you owe each day, which means less interest to compound.
- Compound interest can either work for you or against you!
Juggling a Mortgage and a Business
If you’re a business owner, you can still use the revolving credit technique to pay off your mortgage faster. It’s all about smart cash flow management! If you use the same approach and put all the money you earn off the mortgage, you are chipping away at it and lowering the overall interest that you pay!
Cash flow is everything! Always make sure you are paying your business expenses first and not overspending! It is really all about finding the right balance here. Keep an eye on your ins and outs, and always leave yourself and business with enough cash so you’re not cutting yourself short.
Some key points are:
- Put all your money (from your business revenue) onto your variable or flexible mortgage, reducing the amount you owe and the interest you’re charged.
- The mortgage needs to allow you to deposit funds and withdraw them at will. This is what we mean by a variable mortgage.
- Make sure you’ve got enough left to pay your immediate outgoings and you’re not overspending.
- Make sure you account for tax and other expenses prior to doing this, or at least can shift the tax money back into the business accounts, prior to having to submit payments.
- You shouldn’t really do this if you’re in a partnership. It’s unclear for a business partner what you’re doing and you might upset them. Only if you are the sole owner of the business, can you shift money around like this without implication?
- Make sure you deposit the funds withdrawn back into the business account, just prior to the end of the financial year. This way, your accountant can decide how to divi up the profit, rather than being forced to allocate it to you personally.
The Risks and Rewards of Shuffling Your Money
If your game, shuffling your money around, can be a powerful strategy to pay off mortgages! We’re not going to beat around the bush. It can be risky, but boy, can it be rewarding (if you do it right!). It’s all about making strategic moves at the right time! So you need to do the research, talk to your accountant for professional advice, and know what you’re doing. You’ve got to think a few steps ahead to avoid landing in a bit of a pickle where you can’t pay your mortgage or your business expenses! No one wants to find themselves in that sticky situation. It’s about being on the front foot, not chasing your tail.
If you’re on point with your moves, you might just find yourself paying off your mortgage much faster than you ever thought possible! But you always need to remember that when using strategies like revolving credit and moving your money around, there are risks. You need to make sure you’re well informed, organised and have all of your ducks in a row.
Here’s the crux of it:
- Always think a few steps ahead of where you are moving your money.
- Automate repayments to eliminate the risk of forgetting to transfer funds to the right account.
- Keep up to date with the current interest rates of all of your accounts.
Conclusion: Wrapping Up the Mortgage Journey
At the beginning, paying off a mortgage seems like it’s literally going to take a lifetime, right? But that’s the thing. Even though it’s a hefty task, it doesn’t have to take your entire life! You’ve got to make sure you’re making the right moves. While shortcuts like ‘no credit check loans’ and other quick fixes might look like an easy path, they often come with steep interest rates and can lead you into a nasty cycle of debt. Then it might actually take a lifetime to pay off!
But if you consider strategies like revolving credit and making smart use of your business income. It may just lead you down a path where you pay off mortgages super quick! And never find yourself in a position where you can’t pay mortgages off! Because you came at it with a strategy, that works!
Ready to lace up your boots and take the next step on your journey to financial freedom and pay off that mortgage? Give us a bell at Alternate Finance. We’re all about providing a lending experience. That’s a stress-free service! Whether you’re looking to pay off your mortgage faster or need some guidance on managing your finances, we’ve got your “financial back”. So, let’s hit that trail together, shall we?
