How To Save Money On Your Mortgage

Tips on reducing your home mortgage.

Buying a home is one of the most significant financial investments most Australians will make in their lives. From saving for a down payment to making monthly mortgage payments, it’s a commitment that can take decades to accomplish.

Getting your own keys is only the first step towards attaining the Great Australian Dream. By then, you’ll be far into your mortgage repayment years. When it comes to repayments, though, far too many people make simple mistakes. These errors, no matter how minor, might end up costing you a lot of money over the life of your loan.

1. Make a spending plan.
Isn’t it true that if you want to save money, you must spend less than you earn? You can only be responsible for the desired outcome if you can see your genuine financial situation, therefore make a budget and stick to it!
saving on your mortgage
The majority of people, including many high-earners, are unaware that they cannot live above their means. Despite their constant overspending, they expect things to be different.

You can, for example, carry your shopping list with pre-planned meals and ingredients with you on your usual grocery run to save money that could be better spent on your mortgage.

2. Keep your savings in your mortgage.
It’s amazing how many households have one or more savings accounts in addition to a mortgage payment.
Why pay tax on income collected from these accounts (even if it’s a tiny amount) when you might be using it to offset your mortgage’s higher interest rate?

We now have more power and flexibility over our bank accounts than ever before because to technological advancements. So, instead of stashing your cash in a separate account, why not put it in your mortgage account, where it can help lower your interest payments while still being accessible when you need it?

3. Use your offset account to deposit your income.
Because interest is charged monthly but calculated daily, you save money every day while your income is sitting in an offset account.

Even if you spend the majority of your salary at the end of the month (which, if you budget, you shouldn’t!) You can still pay off your mortgage faster by transferring your money into an offset account, which reduces your interest payments.

4. First and foremost, pay yourself.
If you, like many Australian families, find it difficult to meet your monthly financial obligations or if your expenses fluctuate from month to month, I recommend devoting 10% of your salary to yourself before paying anything else.

It’s an ancient but prudent adage to set aside at least 10% of your salary for yourself (in a savings or offset account). Then survive on the leftovers.

This forces you to save as well as save money on interest, with the extra money accruing if you let it.

5. Review your expenses on a regular basis.
It’s simple to compare and cut costs once you know where you stand and how much you’re paying.

Negotiate a better bargain with your mobile phone, utility and other bill carriers.

When purchasing home items and gifts, compare the prices of identical or related items on several bargain sites and online shopping sites, which can save you up to 70% or more.
Remove any unneeded costs when examining your expenses.

Consider whether you actually need Foxtel, for example. It’s not always about going without; it’s often about finding more effective ways to accomplish the same goal.

6. Every winner requires the assistance of a coach or mentor.
There has never been an athletic superstar who did not have a coach to help them set goals, develop habits, and maintain a positive mindset. The same may be said for your financial and real estate ambitions. You should hire a good coach or mentor and include them on your team — it’s the best investment you can make.

7. Review your financial situation on a frequent basis.
To be clear, those that are financially successful all have one thing in common. Simply put, they are always aware of their financial situation.

Those that are unsuccessful, on the other hand, frequently have no idea where they are financially at any one time. You should keep track of your financial situation on a frequent basis. If you know exactly what revenue is coming in and what expenses are going out, there should be no financial surprises.

3rd March 2022

Author

Peter Farrell

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