BIG BENEFITS FROM EXTRA PAYMENTS

A rule of thumb is that if the mortgage is greater than 50% of the home’s value, then you should not consider any other strategy than simply repaying the mortgage. Either way, extra contributions can make a big difference. On a $450,000 mortgage at 4.5%pa over 25 years, paying an extra $100 a fortnight will save you just over $46,000 in interest and shave three years and four months off the term of your loan. You can also boost your retirement savings. By adding an extra $100 a fortnight (after tax) to super. A 40-year-old, for example, earning $80,000 a year with a current super balance of $75,000 will boost their retirement savings at age 67 by more than $75,000 – from $306,761 to $383,486.