How to reduce your mortgage debt on a single income?

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Getting a home loan on single income is possible. However, owning your home in real terms is a different ball game altogether. Being on a single income, it can be difficult at times to effectively meet the constantly rising cost of necessities as well as mortgage repayments without overly stretching your finances for your own comfort. 
 
Here are some simple hacks to reduce your debt quickly, despite having a single source of income:
 
1. Assess your financial situation, honestly – The first and most important step towards being debt free is to understand your financial situation, honestly. How much do you exactly earn? What is your spending pattern? Take an honest stock and see where you can save more. Optimize your savings by parking them in a high interest rate savings account or an offset account.
 
Maybe you can carry home cooked lunch every week and use the money saved on buying food towards additional repayments (What about additional repayments can make your debt vanish quickly). How about growing some herbs in those broken tea-cups for better health and max savings?
 
2. The art of budgeting, and sticking to it – Having a budget is important, sticking to it, even more. Once you have assessed your incomings and outgoings, it is time to sit down and create a monthly budget (use the budget calculator) that you will stick to. It may seem daunting at first, but slowly you will get there. Also, don’t think that your budget has to be rigid – review it on a monthly basis and tweak according your needs and experience. Have these five elements in your household budget.
 
3. Maximize your savings – Now that your budget is in place, you can see exactly where you are spending, and where you should not. Critically examine your expenditure and cut down on regular cinema visits, shopping sprees and take-out meals to maximize your savings further without even feeling the pinch. It may be a frugal way to live but it can set you free from the clutches of debt much sooner than you think. Follow these savings habits to save more.
 
4. Utilize your free time better – Do you find yourself with spare time at hand that you may utilize better? Check if you can pick up a part time job to supplement your income or do some freelance work. If you are good at art or enjoy dancing or play an instrument well, you could probably run some hobby classes or camps in the neighbourhood. If nothing else, rid yourself of the gardener and get a good workout (and savings) by mowing the lawn yourself. A tidy front lawn will also increase the value of your house significantly.
 
5. Have a garage sale – Running out of space for storing those unused Christmas presents or clothes you bought at the sale and never used? Hold a garage sale to create some extra space and make some extra money that can be paid into your mortgage. Use this lumpsum calculator to work out your savings. 
 
6. Get debt-busting – Get debt-busting with a simple strategy in place. Write down all your debts and start by paying off the lowest debts first, or the ones with highest interest first. While the former strategy will give you a sense of achievement with every debt that is paid off, the latter will save you more in terms of interest payments. Choose what works out best for you.
 
7. Refinance your home loan – When was the last time you revisited your home loan? If it’s been over 3 years, chances are you are paying a much higher interest rate on your home loan in comparison to the prevalent low interest rates in the market. Get in touch with your lender for a better deal or speak to a mortgage broker to refinance to a lower rate. It is also possible to roll all your debts into your home loan for a single monthly repayment that is easier to manage. Do not forget to ask for these essential home loan features that can power up your savings further.
 

It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan

Atul Narang

Atul is the founder and CIO of HashChing - Australia’s first marketplace for pre-negotiated home loan deals. 

Before starting HashChing, he was successfully running his own digital agency serving small to medium size enterprises. He is passionate about digital transformation of traditional business models and has been helping clients in strategising, building and launching online products since last 9 years.

HashChing is a FinTech business which is transforming the way Australians get their home loans and has been featured in the national media multiple times.

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