Take control of your mortgage to escape the month-to-month trap

Covid uncertainty has been painful, but at least it’s reminded us of all of the importance of having some leeway in our finances.

The majority of Kiwis live month to month, so some will struggle to accumulate savings. But if you do have the ability to save surplus income, then all sorts of things become possible. 

You can stay afloat financially if you’re made redundant. And you can start to build the ability to be financially independent.

The first step is to stockpile three to six months of savings.

Tactics to become mortgage-free.

One option is to open a separate bank account and squirrel some money away every month. This doesn’t have to be an account with your main bank. Maybe it’s better if you set this up as a separate savings account with another bank.

Then make sure you send some money there every month. Pay yourself first.

Here’s another idea. You could use a revolving credit account to smash your mortgage debt. If you have the discipline to funnel all your income towards your debt, and don’t use it to splurge on fun stuff, you can knock years off your mortgage.

We’re suggesting these ideas because our focus is always on helping clients pay off their mortgages quickly. Covid-19 lockdowns remind us that life can change quickly – so our attitudes to money need to be conscious and nimble too.

One last thought about interest rates.

You may have noticed that interest rates ticked up recently. It’s not unexpected, and it may be a turning point in the interest rate cycle. 

The thought I would like to leave with you is this: Do not click to re-fix. 

If your fixed rate deal is coming to an end, you may receive an email inviting to click and refix at the bank’s ‘great new rate.’ Pause. And contact us.

We’ll focus on getting you the right deal – not just the one the bank wants you to click on. Planning ahead and understanding the market is part of that deal.