Using two incomes to pay off mortgage faster

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Transcription

Announcer: 96.5, we’re your family’s number one taking your requests this evening. Now Helen Baker, our finance guru joins me on the phone. Evening, Helen.

Helen: Evening, how you going?

Announcer: Great, thank you. Now over the last little while, we’ve been looking at mortgages and home loans and things like this and tonight you’ve got some tips on maybe getting the mortgage down a little bit when it comes to having two incomes.

Helen: Yes. So the great opportunity here is if you do have two incomes or one good income plus a part time income, if you can learn to live off the one income and then almost bank the on the mortgage, you’ll be able to smash away at that mortgage and reduce all the interest that you pay and the length that you mortgage.

The other benefit of doing it that way is should you get redundancy or something happens that you cannot work, then you can still survive because you’ve learned to live off the one income and taken one as an extra so it’s a bit of a treat rather than having to be locked in and really having to survive on two incomes.

The other thing obviously is if you actually fall pregnant, if someone falls pregnant again, it might be a bit of a surprise, you’ve got choices about whether or not you want to be a stay-at-home mum for awhile if you can learn to live off that one wage.

But again, if you’re linked in with the two and you don’t have a choice, it sort of restricts you but if you think of an example, say a $300,000 mortgage and you’re paying the principal interest based on $300,000, but you’re putting say an extra $20,000 or $40,000 a year down on that mortgage, then your interest will only be calculated on the three hundred less that amount and because you’re paying the normal repayments, you’ll really seriously smash this mortgage, you’ll pay it off earlier, you’ll reduce the interest overall and you’ll really start to see a difference coming down in that mortgage and pay it off much earlier, which is a relief for most people.

Announcer: And it is, really, it’s like you say, it’s a relief, relieving the stress, really because you know no matter what, you’ve sorted it on this income and what else you’ve got, you know, it’s not like play money but a backup, isn’t it?

Helen: Yes and it’s about buying yourself some choices, being able to do holidays and doing things if you’re not—if everything is locked in on this mortgage and the bills, you know?

Announcer: Yet again, Helen, you’ve opened our eyes in the world of finance, thank you so much. We’ll catch up with you next week.

Helen: You’re very welcome, bye!

Announcer: If you would like to find out more, Helen Baker is her name and you can find out more about her at OnYourOwnTwoFeet.com.au.