Millennials are constantly under fire for "frittering away" their money. We do the maths.
If you want to pay the mortgage off faster, get rid of the second car.
Cars are seriously expensive, says John Bolton of Squirrel mortgage brokers.
If you quit the car and take the bus you could save $5000 a year or more (think petrol, WOFs, regos, parking, repairs, tyres,depreciation) and if you put that money into your home loan you could shave five years off the term of the loan.
This is one of Bolton's favourite tips for paying down the mortgage faster than the 25 or 30 years you signed up for, but better still use a combination of methods and he says you can pay the money off even faster.
The easiest way is to pay a bit more than the minimum repayment.
"Everyone always just takes the minimum because that's what gets put in the loan documents but paying a bit extra pays it off staggeringly fast."
Take a $500,000 mortgage, with an interest rate of 3.8 per cent.
"If you paid an extra $254 a month you would take it from 30 years to 25 years. If you paid an extra $648 a month you'd take it from 30 years to 20 years.
"An extra $254 a month takes about five years off the mortgage - and it saves about $63,000 in interest over the life of the mortgage."
Maintain discipline
Next, use an offset or revolving credit mortgage because this way spare money in other accounts is working to pay the mortgage off - but be warned you have to be disciplined about applying the money to the mortgage.
Linked to this is paying down or consolidating consumer finance debt, such as car loans, credit cards and hire purchases.
Bolton sees people with $20,000 or $30,000 debt sitting alongside the mortgage and costing them 15 or 16 per cent in interest payments.
If you put this debt on the mortgage - and if you make sure you stick to your repayments and don't rack up more debt - you could knock three or four years off the mortgage, he says.
Next, renegotiate your interest rate. On a half a million dollar mortgage if you can get .2 per cent cheaper that will save $1000 a year, knocking maybe a year and a half off the term.
He says look at ways to get money to put on the mortgage - that might be a flatmate, getting a home and income property or renting out the downstairs.
Good life, not hard life
You can still live a good life even with a mortgage, Bolton says.
"We've still got avocados on toast going, we've still got morning coffees. We haven't touched any of that."
Just because people know to spend less than they earn doesn't mean they do it. Photo / 123RF
And, if you pay extra off the repayments now you will be preparing yourself for when mortgage rates do go up, because while rates are tipped to stay low for some time yet they will go up again.
Over at financial personal trainers EnableMe, founder Hannah McQueen says the average mortgage term they achieve for clients is ten years.
The size of the mortgage is relative to income, she says, so your income to debt ratio is the important part of the equation here.
"If your ratio is one to four we would be saying eight years. If it's one to five we'd be saying 10 years and if it's one to eight we'd be telling you to sell the property - it will be impossible, you will be crippled by the weight of all that debt."
McQueen stresses personal psychology around money and spending is an important consideration when working out a plan to pay down the mortgage faster.
"Financial success is the result of literacy, coupled with behaviour, coupled with the right mindset and the right strategies.
"If you do one of those four pillars in isolation it won't achieve anything and, weirdly, financial literacy is the smallest component of the mix."
That's because just because people know to spend less than they earn doesn't mean they do it.
Strategy is key
Financial success is more to do with behavior and strategy than anything else, neither of which Kiwis are very good at, and you also have to add in the dynamics of a partner.
"You need to understand your own and then you need to understand for your partner and then you need to understand how that translates to when you blend it together.
"Then you need to work out what are your goals and what is your constraint, and what's your opportunity or your willingness to do something."
Her top tips include identifying where you fritter money, but she stresses you also have to know what makes you happy.
If that's avocado on toast, factor it in because you won't stick to a plan unless you are happy.
"For me, it's a cleaner. My happiness is completely linked to whether the cleaner turns up or not."
Axing the cleaner might save money, she says, but she would also resent the plan.
Other advice includes getting a surplus because you need to be making progress and simply not going backwards is not success.
The most common ways of finding a surplus is from food-related costs - groceries, takeaways, eating out, Uber, lunch - and the way you structure your loan.
"It tends to be structured to maximise the interest that is paid to the bank. If you can adjust that it ends up saving you money as well."
Once you have found your surplus you need to channel it into the mortgage, usually through a revolving credit - but McQueen says no matter what the banks offer, do not have eftpos linked to that account.
