“Why setting a meaningful finance goal is worth its weight in gold”
Most people buy a home with a home loan, and most of the time it’s with a loan term of 30 years.
So, take a minute to visualise what that means in real terms. If you have a home loan, how many years have you had it for? How many have you got left?
If you are buying for the first time or upgrading/downsizing, are you signing up for a 30-year loan term?
The loan term you sign up for, or the remaining loan term, is important to consider because, in a sense its defining when you will be home loan free.
Most people accept this to be as ‘how it is”, and continue to work hard, year after year, and give a large amount of their income to their chosen lender.
To put some numbers behind this, on a $1,000,000 home loan taken out over a 30-year period, with interest rates where they are right now, at the end of a 30-year term, a lender will receive approx.. $1,144,514 in interest, meaning that your total repayments will be $2,144,514.
The question you should be asking yourself right now is do I accept this? Do I want my future to look like this?
Imagine what you could do with the money you are giving to your lender in interest?
One thing we encourage (and help) our clients to do is to consider paying off their home loan faster.
Paying off a home loan faster has many benefits. Aside from the satisfaction of knowing that less of your hard-earned money is going to your lender, it free’s up a lot of household income, providing more options in life, can build up your home equity faster, and can open the door to investment opportunities that could further improve your overall financial health.
The first step is to set a SMART (specific, measurable, achievable, relevant, and time-bound) goal. For example, I will pay off my home loan in 10 years (not 30), so on x date I will be home loan free.
The next step is to think about why this important to you and remind yourself of it every day.
Knowing your why will help keep you motivated and focused.
Have a great week!
The team at Build & Protect Financial Services
