The vast majority of Australian borrowers are making big efforts to pay off more than the minimum repayments on their home loans to get out of debt quicker.
The survey was conducted by Finder.com.au and found that 90 per cent of Aussie borrowers had tried to pay down their home loan sooner, and 60 per cent said they had made extra repayments to try to escape their debt quicker.
The survey also found that 40 per cent of borrowers had opted for weekly or fortnightly repayments instead of monthly, and it was the younger generation that was keener to try and pay down their mortgages quicker than the life of their loan.
Finder.com.au’s Bessie Hassan told The Adviser that borrowers felt burdened by mortgages and were putting a lot of effort into trying to escape their home loan debt sooner.
“Homeowners are offended by the prospect that they will still be paying their mortgage off in 20 or 30 years’ time if they only pay back the minimum each month – so they are actively looking for ways to lower their balances,” she said.
Ms Hassan says it might be a good idea for borrowers to join the other 40 per cent of the survey respondents and switch to fortnightly repayments to save thousands of dollars in interest and shorten the life of their loan.
To be effective though, Ms Hassan said borrowers needed to make this a consistent habit, not just a one-off and borrowers should also keep an emergency fund to the side in case financial situations changed and the extra repayments put borrowers under too much strain.
“If you lose your job or get sick and all your savings are tied up in your home loan, you could struggle financially,” she told The Adviser.
“Decrease your risk by having an emergency fund set aside for the unexpected, so you can confidently make extra payments on your home loan and not worry about needing that money in the future.”