Day 19

Low Rates and Higher Repayments – these are the 2 main ways to pay off your mortgage faster. There are legitimate hacks to pay your mortgages off faster – they are simple and do not require a maths degree to understand.

We cover a lot of these tactics in our online classes – sign up for the mortgage masterclasses if you have not already.

You may see some advisers or websites advertising special patented mathematical formulas or strategies… it’s BS. You can pay off your mortgages faster if you have surplus income/cash from additional properties you own – of course.

In America, there is a home equity loan called HELOC used creatively to pay the mortgage off faster but we do not have that in NZ. It is basically a 2nd mortgage.

If you are disciplined with your spending – using a revolving credit facility to manage your income/expenses will allow you to have the spare and unallocated money each month used to slightly offset your mortgage which does bring down the total time you will be in debt.

Blandon explains revolving credit and offsets in this video on youtube.

There is a followup/newer version also.

Revolving credits are great and do not need to be big to positively impact your mortgages and reduce your repayments. Ask your adviser or bank about how to set up something small, to begin with, unless you’re confident that your budgeting is disciplined.

Offset – learn more from BNZ’s site, they also have a nice simple video about it.

If you are planning to keep buying properties, then having options is what you want. Minimum repayments are not the bad thing some people think it is. Using interest-only lending, or trying to reduce the repayments you make each month, it allows you to build up a bigger cash pile. The bank will not always lend you more money using your own home equity so you need to build up deposit and have an emergency fund always available.

This enables you to avoid secondary debt in emergencies and to have the flexibility to make a quick deposit if needed to secure a great investment. Many homeowners have $500k or more of equity but cannot access that without selling due to their mortgage structures.

If you build up your cash to the side you can still do lump sum repayments which we will talk about tomorrow. You will still get cash flow and capital gains and remember the aim is to build a portfolio, not necessarily to build up equity as fast as possible in the properties you already own.



P.S. Tomorrow we go over mortgage structures, this is more eating your veggies but important to understand so when you work with your mortgage adviser it’s not just trusting in them it’s understanding and correcting them or the bank if anyone makes a mistake with the paperwork.