Method 7:  Use Chunks of Equity From Investment Properties.  7 Ways To Pay Your House Off Fast

This method requires that you already have a couple of investment properties in your portfolio. If you don’t yet have an investment property, start by putting all your extra money into buying more properties and not onto your mortgage. We know it sounds counterintuitive, but open your mind to this new concept.

Here’s how it works: you start by investing in more property then you use the capital growth to pay off your own home. Once you understand this simple principle, it will flip everything on its head. You’ll probably be surprised at how simple and obvious this method is.

So, you need money to pay off your house. What’s the easiest way to get the money you need? Work a job where you get paid a few hundred dollars a day? Or own investment properties that are going up in value without any effort on your part whilst their expenses are covered by the rental income? Once the investment properties have increased in value you can sell or refinance them to pay off your own home.

It’s so simple. Yet everyday people keep slogging away at a job they probably don’t like. Trying to pay off the mortgage faster. That’s the hard way to do it! In reality, it’s a much better strategy to pay the minimum on your mortgage and put the rest of your money towards buying more properties.

Australian capital city house prices have doubled on average every 10 years since 1970. If we accept the assumption that this trend will continue and try this: buy two houses instead of one. One will be your own home and the other an investment property.

For the sake of this example, let’s say both houses cost $500,000 with 90% loans at $450,000 each. In 10 years’ time, both houses should be worth over $1 million each. In the worst-case scenario, they both still have a $450,000 loan if they were on interest-only, but more likely they’ll be significantly less if they’re on principal and interest. During the 10-year time frame, the rent on the investment property will also have doubled. Let’s say from $500 per week to $1,000 per week.

Now you can pay off the mortgage on your own home after just 10 years. But how?

You have two options:
Sell the investment property for $1 million and pay out the loan on your own place; or
Refinance the investment property, get a second loan against it for the amount outstanding on your own home’s mortgage and pay it off. The investment property will be able to service the extra loan because its rent has doubled since purchasing it, making this scenario entirely doable.

We prefer option #2 since Daimien’s Golden Rule #3 is to NEVER SELL. When you sell a property you’ll have to pay capital gains tax and you’ll never make another dollar from that property ever again!

Investment properties are different to your own home since they’ll receive rent indefinitely and can service the debt forever. On the other hand, your own home is yours to pay off and you can’t work forever (like your investment property).

It’s important to note here that the second loan you get against your investment property will no longer be tax-deductible since its purpose was to pay off your own home. And that’s fine since you still managed to pay your home off in 10 years instead of 25!

Now with that said, do you want to know how to pay your home off even faster?
Simple: buy more than one investment property!

The more you have, the more capital growth and increased rents you’ll collect, and the faster you’ll get to the point where you can pay off your own home. It’s a simple way to get out of the hamster wheel and get your money working for you.

Join our next webinar for more property investment information that will change the way you view the property market!



~Integrity Team

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Legal Disclaimer: This information ('the information') is presented for illustrative and educational purposes only. It is not presented nor should it be treated as real estate advice, legal advice, investment advice, or tax advice. All investments involve risk and potential loss of money. If you require advice in any of these fields you should contact a suitably qualified professional to assist and advise you. Your personal individual financial circumstances must be taken into account before you make any investment decision. We urge you to do this in conjunction with a suitably qualified professional. Daimien Patterson, IntegrityX Enterprises Pty Ltd, and their associated trading names, companies, researchers, authorised distributors and licensees, employees and speakers do not guarantee your past, present or future investment results whether based on this information or otherwise. Daimien Patterson, IntegrityX Enterprises Pty Ltd and their associated trading names, companies, researchers, authorised distributors and licensees, employees and speakers disclaim all liability for your purchase decisions. You should do your own independent due diligence and seek the advice of qualified advisors before making any investment decision.