Top 10 mortgage hacks
For anyone who has a mortgage or wants a mortgage.
With a financial services career spanning more than 21 years, I’ve discovered it’s NOT knowledge that most of us struggle with, it’s retaining the vast amount of knowledge.
On that note, I’ve compiled my Top 10 Mortgage Hacks.
Some of these you will know and are probably doing well. Some you will know but forgot to keep doing it. A few might be new for you or just phrased in a different way. Either way, I hope these collective hacks make a difference for you and your family to enjoy the best year ever!
These simple budgeting tips can save thousands of dollars in interest cost.
image courtesy of Unsplash
Keep your savings on your mortgage. Rather than pay tax on savings earned in a savings account, it makes clever sense to store your savings against your mortgage or at least in your offset account. This way you are saving a lot more interest costs than what you can possibly earn by savings intrest accrued.
Consolidate your personal finance into your home loan.
By adding your personal loan into your home loan you can pay one easy repayment. You can also get rid of unnecessary high interest rates and cost associated with personal loans. If required, you can reduce your repayments across the longer term of your home loan.
SUPER HACK: Maintain the OLD repayments of your personal finance commitments pre-consolidation into the home loan or offset account. This will maintain the short term of the previous loans and create forced savings, paying down your loan very fast. If you encounter an emergency - the funds will be there when you need it.
Use a Budget. There are many apps available to track your income and expenses and keep you informed of your spending (and savings) habits. Those who are winning the game of money, know exactly where they are in the game at all times. Know your numbers!
SUPER HACK: When shopping for groceries: Take your shopping list with pre-planned meals and ingredients. You get eat very well for $60-$100 per week for a couple. Eat before you go shopping and only buy what’s on your list - I still get in trouble for this one when I go shopping and I’m hungry lol.
Put your income/s in your offset-account. Whilst your income is resting in the offset account or directly on the (flexible) loan you are saving interest every day.
Every Winner needs a coach. If you truly want to win the game of money - you must have a money coach. You need to seek one out and have them on your team. Many mortgage brokers are also excellent money coaches and may not even charge a fee for their services.
Review your financial position regularly. Those that are winning the money game all have one thing in common. They know exactly where they are always. Those that are NOT winning their game also have one thing in common. They don't have a clue where they are at any given time. Know your numbers.
SUPER HACK: Once you know your position, it can make life much easier to automate your bill payments.
Review your costs periodically. Once you know where you are at, how much you are spending and saving, it's easy to compare and get a better deal and lower your expenses. Contact your mobile phone, utilities, and other bill carriers and negotiate a better deal.
Pay yourself first. If you, like many Australian families, are struggling to meet your financial commitments every month, or your expenses fluctuate from month to month - pay yourself 10% of your income before you pay anything else. Simply increase your minimum repayment by at least 10%. This creates forced savings as well as some interest cost savings.
Pay your mortgage more frequently. Many mortgages are set up as monthly repayments. Inherently, this can be convenient when setting up a new mortgage and settling your finances. As soon as you can, change your repayments to at least fortnightly and if possible - pay extra by rounding out your repayment to the next higher round dollar. TIP: create periodical and proportionate rewards for achieving monthly and quarterly goals. Make sure the reward is something you and/or your family really value and appreciate.
Maintain the best mortgage for you. At least every 2-3 years you should be reviewing your mortgage to ensure you have a mortgage that is suited to your specific needs: 1. review the structure of your loans. 2. review the fees and charges. 3. review the features and flexibility. 4. review the interest rate. 5. review your situation and circumstances - they may have changed, entitling you to receive additional discounts or benefits. 6. review the repayments taking into consideration all these points.
John J Maxwell, Cocalex Consulting - Director & Senior Consultant.