Australia Markets closed

How to pay off your mortgage early (with $10 a week)

Think the recent AUD$10 tax concession ScoMo pulled out of the bag isn’t much?

Well think again.

The seemingly modest weekly saving can make a huge difference –  if you use it wisely. You could even pay off your mortgage early.

Calculations by Mozo.com.au show a borrower making an extra monthly repayment of $43 into their mortgage could save up to $9,915 in interest over the life of a typical home loan.

Also read: Why I’m avoiding big 4 bank shares

This could wipe whole year one year off loan repayments.

For a couple with two taxable incomes, funneling $20 into the mortgage each week could deliver almost $19,000 in interest savings over the life of the loan.

Announced in the Federal budget last week, low and middle-income earners (pulling in less than $90,000 a year) will receive a tax cut, making them better off to the tune of around $10 to $11 per week.

“For the average Australian a weekly saving of $10 might seem pretty paltry in the grand scheme of things, but our analysis shows that putting this small windfall to good measure can yield sizeable dividends,” says Mozo Director Kirsty Lamont.

Also read: Meet the richest family in the world

“The same amount of cash you can blow on a burger and shake or two morning coffees every week can also be used towards paying down your debt earlier and saving you thousands of dollars in interest charges along the way.”

For a cardholder with an average credit card debt of $4,400, making an extra repayment of $10 a week could see the debt paid down five months earlier and save $244 in interest charges.