Making extra repayments on your mortgage can cut years from the life of your loan. So for many people, it makes good sense to contribute as much as possible to your mortgage as soon as you can.
Let’s say your 25-year mortgage is $650,000, on which you pay an interest rate of 4.5 per cent. Adding an extra $1000 to your mortgage each month, taking monthly payments to $4,613, can strip eight years and three months from the life of your loan and cut your interest by $157,538.
Earning extra money is also a very attractive proposition during these uncertain times. There is a range of different strategies you can use to raise your income. Here are some of the most profitable – and the most simple.
1. Rent your car
Unless you drive for a living, chances are your car sits idle while you’re at work for most of the day. So why not put your wheels to work while you’re at the coalface?
Car Next Door, which connects people looking for a vehicle with car owners, is one service that can help you do just this.
Car owners can earn as much as $1000 per month renting out their idle vehicles.
It’s likely car sharing will increasingly be in demand as people realise how expensive it is to run a car and how cheap it is to hire one.
2. Develop digital assets
Property investor Joshua Smith has the side hustle covered. He employs an array of different strategies to generate cash he can then put towards paying off mortgages or buying new properties. He says building digital assets is his favourite approach to wealth creation because it gives him income streams that pay dividends for years.
This is how the strategy works. You build a web site with the purpose of it ranking highly on search engine listings when someone searches for terms that relate to the site. For instance, Smith has a jet ski web site full of genuinely useful information about first-time jet ski ownership, accessories to buy, basic maintenance, safety tips and where to ride. Then, you earn money every time someone clicks on a link on your site that takes them to recommended products or to view display advertising.
“A digital asset can yield between $200 and $2000 a month, depending on your audience,” Smith said. “Consistent cash flow takes about a year to come through.”
Even better, you can sell a profitable site for up to 30 times its monthly earnings.
“Those are actually conservative figures and multiples are increasing,” Smith said.” The real potential is in building a portfolio of websites. I have 11 websites that net $75 each a week on average.”
The best part is they don’t require a lot of time and effort and upfront work can reap rewards years later.
3. Reselling online
Smith admits reselling goods on eBay is not as profitable as it once was. There’s a host of YouTube videos that demonstrate how to make the most of this opportunity, and it can be hard to beat the savvy veterans of this space.
“But there’s still potential to make an extra $100 per week,” Smith said. “My recommendation is to find a niche.”
“I made $45,000 in 18 months when I first started. But this meant selling more than 3,000 used items. Most of my sales were textbooks on eBay because students need textbooks and they are unbreakable. My tip is to avoid electronics because you’re likely to get a lot of returns.”
Smith says his best book flip was a Harry Potter title he scored for $2.50 and resold five weeks later for $750. “The book was a first edition from 1997. Harry Potter fans love collector’s items.”
4. Rent out your spare rooms
Darin and Fiona Browne, who are based on the Sunshine Coast, found themselves in a vulnerable position when COVID-19 hit.
They were about to move out of their family home and settle on a new home when Darin, an optometrist, found he could no longer see patients due to COVID-19 and was left without an income.
They were on the precipice of having to pay for two mortgages with no money coming in.
So the Brownes invested $32,622 in a micro-apartment conversion, which covered construction, furniture and staging to attract tenants. They used a firm called Small is the New Big to do the renovations.
“The house was converted from a four-bedroom, two-bathroom property with granny flat into five micro apartments, each with their own bedroom, bathroom and kitchenette. The work took just four days.
All five of the self-contained micro-apartments were rented through a local real estate agent within five days of the renovations.
Before the conversion, Darin and Fiona’s home would have earned about $500 per week in rent. Now the property generates about $1,210 per week in rent.
Small is the New Big co-founder Ian Ugarte says these conversions are easily achievable, but homeowners need to get council approvals, generally through a private certification process.
“Be mindful of the requirements of local and state authorities or risk serious penalties for non-compliance,” he says.
These are just four top tips for earning extra money to pay down your mortgage. Local babysitting, doing odd jobs and selling your old clothes online are other things you can do to generate extra cash.
The idea is to pick one or two tactics and be consistent over a month or so. You may be amazed at how much extra you can earn.