Would you like to pay off your mortgage early?

Can you imagine being mortgage-free?

Here at DDP, we understand that the key to financial freedom is through wise investment and positively geared debt.

The word ‘mortgage’, literally translated from its Latin roots, means ‘death pledge’. But long gone are the days when a mortgage entailed a ‘pledge to the death’… now, with planning and careful consideration, it can mean ‘borrowing wisely for a better life and a worry-free future’. Remember debt is not always a bad thing. You need good advice and a clear strategy, and that is exactly what we’re all about.

Here are some ways you can pay off your mortgage early, thus freeing up a sizeable chunk of your income to travel, buy a boat, make further investments, help your children purchase their first homes, or maybe take an early retirement…

  1. Positively geared rentals

Any income an investor receives from a property that exceeds their expenses (mortgage, tax and maintenance) – a ‘passive income’ – can be generated by a positively geared rental.

If you manage your positively geared rentals well, and particularly if you keep adding to your portfolio of positively geared investment properties, your income will keep going up. The greater your income, the more you can save. The more you can save, the less time you have to keep paying bank interest on home loans.

  1. Refinancing

This doesn’t have to mean your monthly repayments need to significantly change. However, if you switch from a 25-year mortgage to a 15-year mortgage, for example, you’ll save a significant amount in interest and will be mortgage-free 10 years sooner. But on the downside, it will mean committing yourself to higher outgoings. It is only worth doing if you have sufficient income to cover the extra.

  1. Increase your monthly payments, or make extra contributions when you can

This might sound pretty obvious, but even just an extra fifty bucks every month can shave years off your mortgage term. If you get a windfall or a bonus, think about putting it towards the balance of your mortgage – every little helps.

  1. Look at opening up your portfolio to the short-stay rental market

Short-term stays (through well-established sites such as Airbnb and Stayz) offer the possibility of massive yields. Hosting does come with certain liabilities so you will need to be cautious, and check the terms and conditions of your mortgage. But the extra income it can generate might just turn your spare bedroom into a fast way of staking full ownership of your home.