The fundamental plan is to increase the money coming into your household and reduce any other expenditure other than your mortgage repayments. All available funds will need to be channelled into your mortgage to pay it off as quickly as possible.
Plan and prioritize
Here comes the hard part! To pay off your home in 5 years, you’re going to have to prioritise mortgage repayments over everything else (as well as find ways to bring more money into the household to use for your mortgage repayments). You need to decide what you’re prepared to sacrifice to be debt-free in 5 years. Go on a blitz and cancel all the subscriptions, memberships and regular payments that aren’t absolutely essential in your life.
Cut back and cut out
Cut back and reduce everything you possibly can. Use Savvy to compare the cost of your car insurance, your home and contents insurance and your health insurance to ensure you’re getting the very best deals (although it’s important to not leave yourself short on the cover you need). Switch to better plans or lower interest rates wherever possible, which includes your gas, electricity, phone and internet plans too.
Make sure all your interest rates are low
Next, make sure you’re not wasting your hard-earned money by paying unnecessarily high interest. Pay off all your credit cards, personal loans, car loans and store lines of credit as a priority, because these are likely to have a higher interest rate than your home loan.
Compare loan options with Savvy
Look closely at your mortgage and compare all your home loan options with Savvy. Can you find a suitable loan with a lower interest rate? Can you get a loan with lower or no fees? Can you lock in a fixed rate to protect yourself against mortgage rate increases? If you do refinance, make sure you get a loan that allows you to make unlimited additional repayments and completely pay off the loan with no early exit or break fees. Read all the fine print carefully and compare all your options with Savvy before choosing whether to refinance.
Sacrifice luxuries – into your mortgage
Once you’ve found the cheapest possible home loan and insurances and paid off all other expensive debts, concentrate on channelling every single dollar you can into paying off your loan. If you can increase your income – by taking on more hours or getting another job, for example – direct all your additional salary into your mortgage. Forgo takeaway meals and cut down on fancy dinners; cook at home instead and pay the cost of your takeaway into your mortgage immediately, to remind yourself why you are making all those sacrifices.
With dedication and perseverance, you’ll soon see your mortgage shrinking and, after 5 years of financial discipline, you could look forward to living mortgage-free for the rest of your life.