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Pay off your mortgage faster?

Discussion in 'Real Estate' started by Billv, 31st Aug, 2010.

  1. Billv

    Billv Getting there

    Joined:
    15th Jul, 2007
    Posts:
    1,796
    Location:
    Sydney, NSW
    Most people dream of paying off their mortgage but not me.
    As soon as I have enough equity I pull it out and use it a deposit for my next property.

    The following article is for all of you people who are not like me and who would like to pay off your mortgage sooner rather than later. There are some good hints so read and enjoy...:)

    http://news.domain.com.au/domain/bl...se-the-mortgage-millstone/20100830-142vk.html
     
    Last edited by a moderator: 1st Sep, 2010
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,623
    Location:
    Sydney, Australia
    Of course you could do both :D

    Using a split loan arangement, pay down the original PPOR loan as fast as possible to minimise non-deductible debt, while maintaining IO loans or LOCs for pulling out deductible equity for investment purposes.

    I think this is a concept that some people struggle with. Most people tend to fall in to one of two camps:

    A) debt is necessary and lets me have nice toys or holidays now
    B) debt is evil and must be destroyed

    ... where I prefer:

    C) debt is necessary, but only for productive investment purposes ... personal non-productive debt is evil and must be destroyed
     
  3. jettwinneke

    jettwinneke New Member

    Joined:
    7th Dec, 2010
    Posts:
    3
    Location:
    Berrico, NSW
    I prefer this one too :D IMHO, it would be better if you are going to maximize your current cash flow by paying whats required now and anticipate your future increase in salary/income, which could offset the interest paid if you are going to go with the loan full term.

    Of course, its always better to be debt-free, if you can afford it. :D
     
  4. Billv

    Billv Getting there

    Joined:
    15th Jul, 2007
    Posts:
    1,796
    Location:
    Sydney, NSW
    Thats if you can afford the opportunity cost of being deleveraged......
     
  5. Sk3tChY

    Sk3tChY Well-Known Member

    Joined:
    4th Aug, 2007
    Posts:
    358
    Location:
    Sydney, NSW
    I've been the same as you thus far BillV - In fact, both times now I've been a little too ahead of myself. :p

    Bought my first IP at 21 as soon as I could, a little before in fact - I had to borrow a little money off the parents to cover the 20% deposit. :p

    Now, I'm 23 turning 24 and am in the market for my second IP and will barely be able to scrape the 20% deposit together if I buy towards the upper end of my limit.

    My theory is that it's all a snowball affect - The earlier and sooner you build up your portfolio, the quicker and harder it can work for you in the long run. :cool:

    I've also set myself a goal to at least have a million dollars to my name by 30. :D