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Nine in 10 Australian borrowers are said to be going “above and beyond” to fast-track the repayment of their home loans, according to new research.
A national survey conducted by comparison website finder.com.au questioned 2,005 homeowners on their mortgage repayments. According to the results, 89 per cent said they had tried to pay down their mortgage sooner, and the majority (60 per cent) stated that they had opted to make extra repayments in an effort to “get out of debt sooner”.
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The findings indicated that more than one in three borrowers (40 per cent) currently commit to making weekly or fortnightly repayments rather than monthly repayments, with women being marginally more likely to pay off their mortgages faster (90 per cent compared to 88 per cent).
Younger generations were doubly as likely to have tried to pay off their mortgage faster than their older counterparts, with 18 per cent of Baby Boomers saying they had never attempted to do so (compared to 9 per cent of Generation X).
Bessie Hassan, money expert at finder.com.au, said borrowers “felt burdened” by carrying around mortgages for lengthy periods of time, and were “going to great lengths” to break free sooner.
“Homeowners are offended by the prospect that they will still be paying their mortgage off in 20 or 30 years’ time if they only pay back the minimum each month – so they are actively looking for ways to lower their balances,” she said.
Ms Hassan suggested that if borrowers switched to fortnightly repayments, homeowners could save thousands of dollars and shorten their loan term by several years, however, “it needs to become a habit – not just a once off contribution, as consistency is key”.
She also noted that while fast-tracking mortgage repayments could save borrowers thousands of dollars in interest over the life of a loan, it was also important for people to have an emergency fund of “at least three to six months of living expenses” before putting extra funds toward their home loans.
“If you lose your job or get sick and all your savings are tied up in your home loan, you could struggle financially,” said Ms Hassan.
“Decrease your risk by having an emergency fund set aside for the unexpected, so you can confidently make extra payments on your home loan and not worry about needing that money in the future.”
[Related: Bank tells Australians to ‘borrow less and live more’]
