Saving $10 a week can "yield sizeable dividends", according to Mozo analysis
Amidst new tax concessions for lower income tax payers recently announced in the Federal Budget, brokers can enlighten their clients on how seemingly modest weekly savings can make a huge difference in a person’s life if used wisely, according to comparison site Mozo.
Huge savings along the way
In a report released on Monday, the site’s calculations revealed that Mozo claims a borrower making an extra monthly repayment of $43 into their mortgage could save up to $9,915 in interest charges over the life of a typical home loan, according to calculations released on Monday. This essentially wipes one year off loan repayments.
Low- and middle-income earners can expect a tax cut in the 2018 Federal Budget. Those set to receive the maximum benefit can expect around $10 to $11 per week. As for couples with two taxable incomes forking out $20 for their mortgage each week, that means nearly $19,000 in interest savings throughout the life of the loan. Mozo’s calculations were based on a $350,000, 25-year home loan with a 4.35% average interest rate.
“For the average Australian a weekly saving of $10 might seem pretty paltry in the grand scheme of things, but our analysis shows that putting this small windfall to good measure can yield sizeable dividends,” Mozo director Kirsty Lamont said.
The same amount of cash one can blow weekly on a burger and shake or two coffees can also be used to pay down debt earlier and help save thousands of dollars in interest charges, she added.
Many don’t see the value of how putting away an amount as small as $10 into their mortgage each week can bring in huge savings over the life of a loan, she said. This prevents them from completing their mortgage payment almost a year in advance.
Meanwhile, cardholders with an average credit card debt of $4,400, repaying the extra $10 a week could pay off the debt five months earlier with interest charges savings of $244. Mozo’s calculation is based on a $4,400 debt with a 17.25% interest rate and $50 annual fee.
“Our research shows that when it comes to paying off debt, every little bit counts.” Lamont stressed.
