Forget novelty gifts, Xboxes, hampers and clothes – this Christmas Australians are urged to give their children a gift that will make a difference – a payment towards their mortgage.
Mortgage expert Julian Finch – CEO of Finch Financial – says today’s cost of living crisis and all-time high mortgage stress meant many struggle to pay off a mortgage, and that the long-term benefit goes far beyond the short-term gift of a mortgage payment.
In fact, Mr Finch goes as far as to say it is one of the most life-changing gifts a parent can give.
“Every year people waste money on gifts that end up in drawers, cupboards or on Facebook Marketplace,” Mr Finch said.
“However a mortgage payment? That’s a gift your adult children will feel for the next 30 years. Even $100 goes further than any candle or novelty present.”
Finch Financial Services’ Julian Finch. Supplied
Mr Finch said should parents make a one-off $500 Christmas contribution, over the course of a standard 30-year mortgage at 6 per cent interest, this would reduce the total interest paid by their children by around $580, equating their $500 gift to $1080 in savings over time.
“A $1,000 Christmas payment cuts about $5,023 in future interest, which means a $1,000 gift becomes more than $6,000 in real financial value,” Mr Finch said.
“A $5,000 Christmas contribution is extraordinary.
“On a typical 6 per cent loan, that one payment wipes out around $25,113 in future interest.” That means your $5,000 gift becomes more than $30,000 in real financial value.
“A $10,000 Christmas mortgage payment is life-changing,” he said.
This is what would really help your kids out this Christmas. Give them cash towards their mortgage. Picture: iStock
“On a standard 30-year loan at six per cent, that one gift wipes out around $50,226 in future interest, turning a $10,000 contribution into more than $60,000 of real financial benefit.
“No traditional Christmas present even comes close to that kind of impact.
“There isn’t a present on the planet that comes close to that.”
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Finder home loans expert Richard Whitten said new data showed the costs of owning a home over the life of its loan were close to double the sticker price – more than double in some cases – and anything people could do to reduce the term of that loan would see savings for the homeowner.
“New buyers will almost certainly underestimate the long-term costs of home ownership – it’s basically impossible to fully map them out,” he said.
“Interest charges on the home loan are massive.
Finder.com.au Home Loans expert Richard Whitten.
“Home insurance premiums have risen sharply in recent years.
“Then there’s strata, maintenance and repairs, upgrades, the list is endless.
“But the upsides are really positive.
“Paying off the loan principal builds up your wealth, and the property value will most likely grow over time.
“And if you can pay the loan off faster those interest costs drop.
“Once the loan is paid off you’re in a substantially better position than a renter.”
Mr Finch said that households were under pressure, and that particularly young families were struggling to keep up in modern Australia.
What they didn’t need, he said, is more stuff.
Why give them more clutter when you can give them a gift that will make a lasting difference? Picture: iStock.
“Repayments are high, groceries cost more and most young families are doing it tough,” he said.
“A mortgage contribution gives them breathing room.
“It shows love in a way that actually matters,” he said.
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“A few extra dollars off the mortgage is the most meaningful support you can give right now.
“If you want to show love this Christmas, help your kids reduce their mortgage, not add more clutter to their cupboards.
“Nobody returns a mortgage payment, nobody regifts it, nobody throws it away,” Finch said.
“It’s the only gift that reduces debt, increases financial security and genuinely improves your child’s future.”
– with Aidan Devine
English (US) · 