Although written in 1999, this book details practical ways to pay off your home loan quicker. There are no tricks to it, just straight down the line advice on budgeting and how a little money goes a long way.
The Value of Ten Dollars
Perhaps the best example that Anita offers in her book is the value of adding an extra $10 to the loan on top of the usual weekly, fortnightly or monthly repayments. Anita shows with the assistance of an online Lump Sum Repayment Calculator how $10 can save around $100 interest on a loan.
As an example, she advises accessing the online calculator and entering the figure of $120,000 into the box. This is the loan amount. It is possible to otherwise enter the current balance of one’s own home loan. Following this:
- Enter a figure into the interest rate box, for example eight or the percentage of interest that is likely to be paid 'on average' over the term of the loan
- Enter 30 years into the loan term box or however many years are left on the home loan
- Put $10 into the lump sum box and enter 0 into the box titled ‘lump sum made after’
Now look at the figure on the bottom right hand corner of the page. If using the example figures that Anita suggested, this figure will be $99.68, showing the interest amount that was just saved by paying a measly $10 extra. If the repayment frequency is adjusted to fortnightly or weekly, this savings increases slightly. Suddenly $10 has a lot more power! Think of how much money could be saved by consistently paying off just $10 extra each repayment.
Tips for Paying off a Mortgage Sooner
Anita looks at many different aspects of getting the loan paid off sooner. These include hints on how to talk down the price of the property, having a large enough deposit and what she titles the ‘dirty’ word: budgeting.
For those interested in how much they can feasibly pay off over a three, five, seven or even 10 year period, there is a table in which she has calculated these amounts. They accommodate for different interest rates, giving a general idea for 7% interest through to 10% interest. This is all calculated based on how much in the way of fortnightly repayments can be put toward paying off the loan.
Because they are based on how much is able to be paid off, rather than one’s income, Anita gives a general idea of how much a single person or couple can borrow based on repaying capabilities. Looking at paying off the loan in the short term, these figures are quite conservative, with the author encouraging investors to not take out a loan that is beyond their financial capabilities to pay off in a short time frame.
Budgeting, the Dirty Word
Anita focuses a chapter on the importance of budgeting and supplies the reader with tools to budget down to the last dollar. Despite focusing on being frugal with funds, Anita also encourages couples to create a ‘Sanity Allowance’ and put money into this each week or fortnight (whenever paid). This allows the investor to save for something they particularly want while still paying off a loan or perhaps just to go out to dinner or the movies every now and again.
A straight forward and easy read, Your Mortgage and How to Pay it Off in Five Years is worth investing in. This book won’t take long to read and will provide a number of ways to reduce the time spent paying off a mortgage as well as save the investor a lot of interest.
References:
Your Mortgage and other books available for sale by Anita Bell
Chris Thomas - C. Thomas has studied and worked with horses since 2001. She teaches horse studies part time and is undertaking an Equine Science ...
Join the Conversation