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PPR loan accelerated repayment plan

Discussion in 'Property Finance' started by CJP, 30th Jul, 2015.

  1. CJP

    CJP Active Member

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    2nd Jul, 2015
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    Location:
    Melbourne
    Hi all,

    Partner and I are wanting to expedite repayment of our home loan quite significantly to reduce the loan term to 5-10 years. Loan is standard variable. In terms of increasing repayments, is there any "ideal" time of the interest calc cycle do make additional repayments. We were paying the minimum amount fortnightly, but I have since changed this to an increased amount over minimum, paid weekly. We also have an offset account attached to the loan. Plan is to repay down 100k or so and then refinance with LOC and use funds for Another IP.

    Any suggestions or comments?

    Cheers
    CJP
     
  2. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    There's no real trick - just spend less and keep smashing the mortgage.

    One small trick is to use a credit card for expenses - store savings in the offset and clear the credit card once a month before interest kicks in.

    That saves a little bit of interest on the home loan and might earn you some points on the credit card.

    Realistically though - being a tight ass and increasing income where possible is the logical solution to paying off your home loan sooner.
     
  3. tobe

    tobe Well-Known Member

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    If you can double the repayments, the term should reduce to about 5 to 8 years. So make your scheduled fortnightly payments weekly and your well on the way.
     
  4. CJP

    CJP Active Member

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    Hi Jamie,

    Thanks for that.

    Yep we have awards CC which day to day expenses go on to hord funds in offset, plus we keep our cash buffer in there. Once we establish LOC with a good limit, we will less reliant on having the cash buffer there. CC Is set up to clear balance at end of period so no chance of paying CC interest. I just wanted to check if there was an ideal time each month to make the additional payment to have biggest impact on interest. But sounds like no lol. I agree, really is just a hook in, spend less, don't buy new cars or expensive holidays or house artifacts, and put all spare dollars on it. All bulk payments like tax return and bonuses are going on it too. Our goal is 5 years and we will need to increase our income over the years to make it, but we are going for it anyway. It's just a big chunk of money each month on min repayments that could be servicing loans on investments. That's the biggest driver, and of course tax free million if / when we sell in years. We have a large sheet of butchers paper in the kitchen on the wall which is our repayment tracker. All records go on and shows outstanding balance, it's a good reminder every day to keep you focused on the goal and not the new motorbike or other artifacts lol. if it takes us 7, I'm not too disappointed, we are still 23 years ahead ;)

    Cheers
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    If you have your pays going into the offset it will make no mathematical difference when you pay in the loan. The itnerest will still be the same.
     
    CJP likes this.
  6. CJP

    CJP Active Member

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    2nd Jul, 2015
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    Location:
    Melbourne
    Thanks terry, i understand what you are saying.

    Cheers