Method 2: Wash Your Wages Through Your Loan. 7 Ways To Pay Your House Off Fast

You might be wondering what it means to wash your wage through your loan. Here’s how: firstly you pay your wages straight to your mortgage. Then you simply redraw only what you need as per your family budget and only right before you need it. This way all of your spare cash sits against your mortgage, reducing how much you owe and how much interest you’re charged.

What then happens is that the apportionment of your repayment between the principal and the interest becomes less interest and more principal. The spare cash you don’t use stays there, paying the loan off faster.

There are a few ways you can do this, so speak to your bank about the options available to you.
The first option is a redraw facility, where any EXTRA money you pay in can be withdrawn again. The idea is not to take it all back out, of course, just the bare minimum.

The second option, my preferred method, is an offset account – a savings account connected to your mortgage. Instead of earning interest on your savings, the offset account will reduce the interest charged on the associated mortgage. The balance of savings is subtracted from the balance of the loan before interest is charged.

The third option is a Line of Credit (LOC) which is a home loan that basically works the same as a credit card. There is a limit and you can draw it all out but you must make regular payments to keep pushing it back down.

All three of these options deliver the same effect: pay all your wages to your redraw facility, offset account or LOC, only withdraw what your budget requires and leave the rest there. That includes all your overtime, allowances and any extra money that comes in.

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So that’s method two of seven. Stay tuned for the next five!
– Integrity Team

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