Where are you with your mortgage?

mtfranklin on 06/07/2016 - 11:34

Recently during a conversation with a close friend who is running a successful business realised that he was able to pay off his $450K mortgage in 5-6 years in Sydney, his partner doesn't work and their family has also grown over the period. During the same time, with our (me and my partner work in 9-5 employment)mortgage of a similar amount we were only able to shave off 1/8th of the mortgage while catering for a similar growing family. So, this brings me to question as to where I stand amongst other employed Aussies and what am I doing wrong.

What is the size of your mortgage?

How many years to pay off?

If you haven't paid off , where are you at and after how many years?

Financial

Comments

  • Looking4Bargians on 06/07/2016 - 11:40

    Still 27 years to pay and only paid 1/6the of my mortgage.
    how did he manage to do. Did he give you any advice ?

  • Kangal on 06/07/2016 - 12:01
    +10

    Cocaine is a hell of a drug…when you sell it and launder the money in your "successful business"
    ; )

    As usual, the devil's in the details.
    And if he's your friend I'm sure he won't mind sharing with you.
    And you're our friend, I'm sure you won't mind sharing with fellow Ozbargainers.

  • mtfranklin on 06/07/2016 - 12:14
    +6

    The question is not about his business or his methods. I have known him for years, and I have seen the amount of hard work and sacrifices that he put in to in growing his business. I have nothing but respect and admiration for his efforts. The details are pretty simple, when I was spending money on dinners and drinks during my single 20's life, He was saving money. While I took the easy 9-5 jobs with no weekend work, he was busy working 7 days and was planning to start his own business. He took risks and challenges and it is now paying off his mortgage faster.
    I remember he was not impressed when I showed him my ipod that I bought for $450 that could hold 16GB of songs, he said it wont be of any value in a few years time and that I'm wasting my money.

    • mskeggs on 06/07/2016 - 12:26
      +15

      So there is your answer. He has prioritised financial success over enjoyment down to a level that is well below average consumption.
      The other thing I see is people re-financing and taking out equity or using it to bid up to a new house.
      Pay a bit extra on your mortgage and forego the fancy holiday or eating out as much if it bothers you.

    • dasher86 on 06/07/2016 - 13:00
      +7

      question to you though.
      How much 'quality of life' do you want to sacrifice to get to your mortgage being paid off.
      I too spent a lot of money on drinks in my 20's but i wouldn't change anything for that.
      You're not doing anything wrong. People have different priorities.
      I know some people who will be happy renting for the rest of their lives.

      • mtfranklin on 06/07/2016 - 13:10
        +2

        I don't look back my life with regret, I've had a good run so far. Maybe some changes, but that is what experience is all about. The purpose of the post is to see how fellow ozbargainers who are employed in 9-5 routines are doing with their housing mortgages especially in Sydney and Melbourne. In a way, its a sweetner for me to find out that I'm not alone looking forward to the next 20 years in paying off a loan.

        • dasher86 on 06/07/2016 - 13:25

          well in that case i'll be done with my mortgage hopefully in 5 years for my first property.
          In my opinion i still live a great quality of life and have travelled to 20+ countries and lived abroad.

        • mtfranklin on 06/07/2016 - 13:26

          @dasher86: what was the size and the years taken so far?

        • piggyfund on 06/07/2016 - 17:22

          @dasher86: I too am in a very similar situation to you. Its all about balance, knowing when to save and splurge.

        • icejester on 19/07/2016 - 23:59

          The issue is the 9-5 job
          No one earns good money simply doing a 9-5 job
          Overtime, weekend work is what lays the foundation of either a successful career or business
          What we see people doing at work 9-5 is a fraction of the extra work they put in to get ahead
          Yes and cutting down on frivilous spending like eating out, alcohol, new tech gadgets is a good way to start

  • tomsco on 06/07/2016 - 13:30

    I've had my property about 2.5 years (2b unit) and would say I've also paid about 1/6 of it (28 years old).

    • Sex on 06/07/2016 - 16:54
      +2

      $2 Billion?

      • tomsco on 06/07/2016 - 17:30
        +1

        Haha. Would be the most expensive 2 bedroom unit.

      • imc123 on 06/07/2016 - 17:31
        +1

        haha, 2 bedroom :)

  • nocure on 06/07/2016 - 13:34
    +1

    1st - 55,000 Paid off in 5 years DINKS
    2nd - 75,000 Paid off in 7 years DINKS
    3rd - 155,000 down to $115,000 with 20 years left. SIWKS

  • macrocephalic on 06/07/2016 - 13:41
    +2

    4.5 years into a mortgage, paid off 1/3 of it. Two average wage full time workers, no kids. I ride a fairly cheap motorcycle which I've had for 5 years. My wife drives the car that she bought 11 years ago when she first got a full time job.

    We took two northern hemisphere holidays in 2014, and will be taking another one this year. It's about priorities. I don't want a mansion, we'd just fill it with crap and we'd have to clean it. I do want to pay off the house we have though, because we'll have much more spending money when we're not paying interest on a home loan.

  • mtfranklin on 06/07/2016 - 14:27

    we are a typical middle income earning (battlers) around $10K a month. $3K goes to repayments, $2K goes to Child care, 3K is for everyday expenses (not a luxury)leaving you with $2K p.m as saving towards your goals. I can't see how I can change it to pay off the mortgage quicker ( the savings do offset the interest, therefore no need to make bigger repayments?)

    Only way is to earn more money …and save on whatever you can.

    • [Deactivated] on 06/07/2016 - 15:48
      +2

      Is the $2K on childcare before or after the government benefits? That's a large part of the income. Have you got family who can do 2 days a week childcare? Have you done the calculations of one income and no childcare costs?

      If $10K per month is middle income battlers, what is high income.

      $10K per month is $120K per year which sounds high to me.

      We paid off 200K over 5 years around 15 years ago before we had kids.

      • mtfranklin on 06/07/2016 - 16:25

        After benefits, its approx $50/child per day. We both fall in to the category of what the government calls average income.

    • Sweetnsour on 07/07/2016 - 15:14
      +1

      I would consider changing your loan to an interest only loan with 100% offset. Use your "saved put aside $2k" to good use by offsetting interest. You can withdraw out for emergencies if needed. But and this is a big caveat, you need to be diligent with your spending. Otherwise you can go backwards, but if done well you will be in front and paid off on less time.

      Personally paid off loan in 5 years but now with kids need upgrading and restarting another bigger loan. Personality-wise I haven't been to europe only shorter Asia trips. Have worked 6-7 days without kids but now back to 5 days a week. But I dont take any of it for granted.

  • Heracles26 on 06/07/2016 - 14:43
    +2
    • I am 27 and partner is 26 - no children
    • Loan of $500k
    • We have paid off $200k in the 2 years we've had the loan
    • mark-emark on 07/07/2016 - 11:26

      Paid off $200k in 2 years?! I think I'm in the wrong business, we don't even earn $100k per annum after tax let along being able to put that in to our mortgage after bills/expenses.

  • cocomelon on 06/07/2016 - 15:06
    +2

    I am 32 and partner is 31 - no children
    Loan of 535k managed to knocked it down to 210k in 3 years, just bought another for IP and the loan size is 580k.
    i did a lot of balance transfer and has helped to cheat the interest (you have to very diligence), however again its all about priorities.
    my life principle is to work hard while you are still young and enjoy the financial freedom in your retirement age

    • mtfranklin on 06/07/2016 - 15:31
      +1

      If you knocking off $100K a year, that's very impressive. I can see a trend that those who are knocking it off faster are those without children. In our case I can easily save an extra $3K a month or overall $60K a year if we didn't have kids as childcare in Sydney is very expensive.

      • LXE3 on 06/07/2016 - 15:39

        Yes, that's one thing I didn't mention. I work from home, mostly at night, when my husband can look after the kids. If I need to work in the day, I'm fortunate enough to have my mum very close by to help. Since I had my first child six years ago I've been able to avoid commuting costs also. Any chance a relative can help out with the kids or you can work from home?

        • piggyfund on 06/07/2016 - 17:32
          +2

          I too work from home, I saved a lot of money by not commuting, not having to buy suits and lunches out. Also good tax deductions.

      • VBO on 08/07/2016 - 15:18

        Yes, no kids is the key.

  • LXE3 on 06/07/2016 - 15:36
    +6

    I just paid off $467k in just under 6 years. Basically, I was paying $4k a fortnight, which was a very high proportion of my wage and we lived off my husband's much smaller wage. It was about three times the minimum repayment. It starts off slow but the extra repayments really help after very little time.
    We don't live extravagant lives. A night out for us is Chinese, Thai etc rather than expensive places and most of what we wear etc, is stuff on special (I buy when things are cheap and put them away for next year). I also buy a lot from factory outlet stores.
    We have never owned expensive cars. We have new ix35s, which fit our kids and get us from a to b. We have annual holidays in Bali but I always get the flights when they are on special. Our last trip was $1400 flights Brisbane to Bali for two adults, two kids and an infant. Whenever we go places, I always pack the kids drinks and snacks and I always look for discounts to movies, play centres etc.
    I stop a mortgage repayment if we get a massive bill like rates or insurance or Christmas.
    While some people might see our lives as compromised, we are really enjoying the freedom that buckling down for those years has provided.

    • mtfranklin on 06/07/2016 - 16:31
      +1

      $4K a fortnight is $9K a month towards mortgage. $110K a year! That's around how much we make after tax and before expenses.

  • piggyfund on 06/07/2016 - 17:29
    +3

    I have had mortgage for about 10 years and have about 2 -4 years left to pay it off (under 50K left) depending on how aggressively we want to pay it off. We are under 40, DINKS and once we pay off our place we plan on renting it out and traveling, living off rental income and our savings, maybe work odd jobs around the world (we can do contract work). Unsure if we will invest more or call it a day (retire modestly). Leaning towards the latter.

    I have to credit this website, I have saved a ton of money over the years with deals and tip offs of sales and advice.

    • LXE3 on 06/07/2016 - 19:31
      +3

      We are the same, now we've paid off our mortgage we are not on a mission to get bigger and better. We have school fees to pay and holidays and update cars and appliances as needed. We just want to relax a bit. I'm reluctant to give up my gig though…work from home is a good deal but pretty hard to get without having worked for someone for a while before you can be trusted enough to get it. I too have saved plenty from this site. We did the US for six weeks last year nearly all off this site.

  • [Deactivated] on 06/07/2016 - 18:45
    +2

    Paid off 10 years ago. Sheit it makes life easier than renting.

  • red-hot on 06/07/2016 - 21:20
    +2

    We paid for our house outright, no mortgage. SI3K's. Freedom.

  • conan2000 on 07/07/2016 - 07:35
    +1

    33 with 1 7 month old.

    Paid off $70k of a $500k mortgage in the last 2 years. Also saved about $70k in that time which is sitting in an offset account. Most of that was in an 18 month period before the kid arrived though. Single income for 12 months slowed that down massively. We clear about $1300 per month off the mortgage and save about $500-1k per month as well.

  • Muimuimorris on 07/07/2016 - 08:01
    +5

    We paid off our $500K mortgage within 8 years. This was through ploughing all our spare money into the mortgage and transferring 50% of our pay directly into the mortgage account each month. We took no holidays at all during these 8 years and consciously saved every spare dollar that we had to shave off what we owed the bank. During these 8 years we simplified our lives considerably and learnt what is important. Whilst we had family members looking down on us because we never went on expensive holidays, we now enjoy the mental freedom of living debt free and having one of us as a stay at home dad to our two kids who arrived into our world in the last 3 years. Is Frugal the new Black?

    • Lcfc2016 on 12/07/2016 - 20:58

      Brilliant, love this!

  • donbot on 07/07/2016 - 09:00
    +2

    We're on track to have paid down 1/5th of our mortgage over 4 years. Down from $590k to $450k.

    In those 4 years we will have:

    • Freshened up the apartment (new blinds, painted DIY, little fixes)
    • 2 weeks in Japan
    • A month in Europe
    • A week in QLD
    • Gotten engaged & married and paid for both ourselves.
    • Bought and paid off two 2nd hand cars (borrowed from savings in offset - cheapest rate)
    • Done everything we wanted to: concerts, dinners, etc.
    • Gotten the mortgage down to a point where if we rent it out, it will pay itself down slowly over the next 20 years.

    Could we have paid off more over this time at the expense of enjoyment? Absolutely. But at what cost? I don't work just to pay down debt - that is a shit way to live. Gotta enjoy yourselves a bit. Cant always wait for tomorrow…

  • thord on 07/07/2016 - 10:36
    +1

    What mortgage? Can't afford a mortgage in Sydney with the overpriced housing market / won't pay for the overpriced houses.

    My investment account is doing pretty well though.

    • ykwon10 on 07/07/2016 - 10:45
      +1

      Good on you. Keep it up and one day you might buy a property outright when the time is right (not overpriced). Instead of us all slaving away for our mortgages. Sigh…

  • mark-emark on 07/07/2016 - 13:18
    +3

    Reading these comments I feel like I need to start my own business to make a decent amount of cash. Trying to find some exact recent numbers is hard but according to the ATO:
    If your 2010-11 taxable income was on the left then your income was larger than this proportion of taxpayers
    $48 864 - - 50%
    $72 948 - - 75%
    $79 934 - - 80%
    $89 331 - - 85%
    $105 461 - - 90%
    $140 479 - - 95%

    And from the ABS, median weekly total cash earnings, May 2012, is $963 p/w ($50,076). Where "cash earnings" = wage paid and excludes employers’ contributions to social security and pension schemes and rental income etc.

    Looks like many of those commenting would be easily in the top 10% of taxpayers and likely in the top 5%.
    What's even more interesting is this doesn't include those on welfare, pension, disability, work for the dole etc. So that would put you up in to the top 5%-3% of adult incomes at a guess…

    So I think looking at the average person (even assuming the average Ozbargainer sits well in the top half), most would be struggling to pay $100k per year off a mortgage let alone $25k.

    Like I said, maybe I need to start consulting.

    NB. For reference I sit in the top 15%, my wife works part time at a hotel and we have a 10 month old baby.

    • Sweetnsour on 07/07/2016 - 15:42
      +1

      Starting a business can be hard work and risky. Hence the statistic that most don't make it to 3 years. Also some "businesses" are just sole traders. You want a true business that have a team to help you. It's easy to see the successful ppl but when there is one, there is probably another 3 that were not. As always with reward comes risk.

  • coolhead on 07/07/2016 - 13:31
    +1

    paid off around 50k in about 3 years.. but now have changed it to interest only… i could have easily paid alot more and got it down but saved money and spent on other things like.. shares, property, overseas holidays etc..

    now the spare money is in my offset account which i can use any time and not paying interest on that..Plus if i convert this to an investment property down the line i can make use of tax offsetting…
    been single income with kids for last 20 months…

  • momov3 on 07/07/2016 - 14:14
    +1

    Your friend has not mentioned whether he came into inheritance to help pay off his mortgage. I also know of instances where struggling mortgagees 'inherit' some lump sum from their parents as they prefer to bequeath $$ whilst they are alive and have assets to dispose, rather than wait till they die.

  • JIMB0 on 07/07/2016 - 14:34
    +1

    Any one here into the Mr Money Mustache website? Lots of insightful articles on how to reduce your expenses to the bare minimum by doing things for yourself whilst still living a very fulfilling and satisfying life.

  • Euphemistic on 07/07/2016 - 21:05
    +1

    If we'd stuck with my first house from late 90s and not upgraded cars too many times we'd be well and truly mortgage free, the house cost under $160k then. But, we've moved twice, both a step up in the market, and In near 15y of marriage have upgraded cars about 6 times for changing circumstances with kids etc. after all that our mortgage is of a similar size (very manageable) to when we first got married, but there is a lot of stuff happened between then and now.

    For us the balance between spend and save is working well.

  • paaj on 18/07/2016 - 15:39

    we're DINKS
    I think over the last 5 years we've paid off about 20% of two mortgages. We throw all available $$ into the offset and use it pay for holidays etc. So it is 2 steps forward, 1 step back.
    I think the key is both you and SO (if applicable) need to have the same goals and drive. We act as Finance Ministers for each other and scrutinize each large expense. As someone else mentioned earlier, it is difficult initially as your interest payments are high, but your $ goes much further once you pay off about half your mortgage.

  • paaj on 18/07/2016 - 15:50

    Edit wrong forum haha

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