Paying off your home mortgage quickly makes good sense. There's no tax deduction (for Australians) on your own home repayments. Extra money paid off your mortgage 'earns' interest at the rate you save on your mortgage interest payments, and it does so tax-free. There's no capital gains tax either so home ownership does have pluses.
One way or another I've had a mortgage since 1974. Several times it's been almost paid off then I've moved to another house and started again. I've lived in my current house for just over 2 years. So far I've paid off almost 20% of the mortgage. That's not too bad considering I've re-drawn quite a bit of what I paid.
Interest rates just went up another 0.5% so it's timely to think about my repayments. I've decided to increase my extra fortnightly repayment. I can afford it without out too much sacrifice and it will help me pay it off faster. I want to be mortgage-free within 5 years so I can save for my retirement.
These days there are a number of ways to pay off your home faster. Basically the fastest way is to make sure you pay more than your installment each week or fortnight. I get an 'extra' installment paid direct from my salary each fortnight. That way I never see the money in my hand, so to speak.
If you are disciplined, you could try one of those accounts where you get all your salary paid direct into your mortgage account. Then you pay all your bills by credit card. The salary saves interest on the mortgage until the end of the month when you pay off the credit card. I know I couldn't manage that one very well. That's why I keep my mortgage and my operating accounts separate.
14 February 2000
Mail the Reformed Spendthrift