Once you get to the point where your mortgage isn’t weighing you down, you can explore other investment options.
For the past five years my husband and I, age 28 and 27, have been putting as much as we possibly can into extra mortgage repayments. For some time we weren’t putting anything into a savings account because we figured we could redraw if we were desperate. We are now putting 10 per cent of our income into savings and 20 per cent into extra mortgage repayments.
I think a good target for a home loan is 12 years – in which repayments would be $1000 a month for every $100,000 of the loan. For example, in a loan of $500,000 the optimum payments would be $5000 a month. I think they’re the perfect age for that strategy but just keep in mind that the non-concessional contribution limit increases from $110,000 a person to $120,000 after June 30. Therefore, a $110,000 contribution can be made before June 30, and then $360,000 after June 30 using the bring-forward rules.Once the contribution is received by the fund, the money is treated the same as any other contribution. There are no special rules for it, except that you have to wait three years to do it again.
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