How to get a bonus and pay off your home loan faster

When we meet a prospective client for the first time and we start to get to know them, their situation, their goals, we almost always ask the question (if they don’t raise it) if they would like to pay off their home loan faster.

In over 10 years in business, we have yet to hear someone say “no, we love giving our hard-earned money to our lender and we love making our monthly repayments”.

Whilst we find that most people want to pay off their home loan faster, one of the “barriers” to achieving it is somehow finding the money to make an additional repayment.

I get it, we have had 11 interest rate rises and the cost of just about everything has gone up, its hard.

One simple way to “find” money to make an additional repayment is to salary package your home loan repayments. Put simply, this is using part of your before-tax salary to pay your home loan. This means that your take home pay would be smaller, but you would pay less tax on your income.

For example, for someone earning $100,000 per annum (ex-superannuation), they would pay $24,967 in tax. If their $600,000 home loan repayments amount to $3,407 per month ($40,884 per annum) and they salary packaged their home loan, their tax would reduce to $10,749, or $14,218 less per annum.

If these tax savings are then used to make additional payments, it could save 13 years and 4 months off the loan and $309,104 in interest!

You’ll need to check if your employer and lender allows salary packaging first and we recommend you get professional advice from a qualified expert such as a salary packing representative and/or financial adviser before proceeding.

For other strategies to help pay off your home loan faster, read our FREE report attached called ”save 13 years and $338,209 in interest” (attached).

If you would like to discuss this further and see how much this strategy could save you, please reach out.

Have a wonderful week,

The team at Build & Protect Financial Services