There are five strategies that have a real impact on the time and money it takes you to clear your mortgage debt. One of the simplest is the +10.
The +10, also called the GST strategy is one of the easiest and most reliable methods of reducing your interest costs and shortening the time it takes to repay your mortgage.
How it works
The +10 requires you to make small, extra payments each time you make your regular minimum repayment, however as you can see the results are definitely worth it.
We compare time and savings from the +10 to the popular Fortnight Payment Plan.
The +10 outstrips the Fortnight Payment Plan in savings, reducing interest costs on the average mortgage by over $154,000. It gets you mortgage free 7 and a bit years faster than simply paying the minimum lender repayments.
To make it work you must
+10 is simple, foolproof, within your reach and your control. All you need to do is set your regular weekly, fortnightly or monthly repayments 10% higher than the minimum repayment required by your lender.
Each time your lender changes the interest rate of your mortgage, they must notify you of your new minimum repayment. Simply get out your calculator and multiply that amount by 1.1, then set your repayment to the result by telling your payroll office or reprogramming your internet banking.
Ease of use
This one’s easy. It works no matter how often you get paid and regardless of whether you have set your repayments for weekly, fortnightly or monthly.
And no phone queues, bank queues or any of that life sapping rubbish.
Special Mortgage Features
• Your mortgage must accept extra payments (preferably unlimited).
Watch out for
There’s nothing much to be wary of when setting this up as it is so versatile and simple. However you should watch out for lenders reducing your payments when interest rates fall. The best way to avoid this is not let your lender manage your repayments, but to do it yourself.
Want to put the +10 on turbo? Instead of topping up payments with 10% of your loan repayment, try 10% of your pay packet.
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