In Chapter 2 I talked about how people generally let the information they receive from their lender determine how much they spend and how much they repay.

Most people look at how much they can borrow before they even consider why they want to buy, how long they want to borrow for, or even the maximum amount of interest they want to repay.

Yes, without considering the maximum amount of interest they want to pay as well.

How much interest are you willing to pay? And don’t say as little as possible!

I’ll come back to this topic later. It’s worth talking about further.

We look at in reverse and start by asking why am I buying, followed by the when; “how many years do we want to pay our home loan off in?”

This is known as reverse home loan thinking:

• You start with your why, why are you buying;
• You think about your when, when do you want to pay it off by
• And next you consider the how?

If your why is to buy a first home, and your when it to pay it off in 5 to 10 years; how are you going to be able to do this?

To get to the how, we must ask ourselves two more very important questions before considering how much we want to borrow (which I will get to very soon).

The only way you can pay your home loan off in 5 to 10 years, is for you to decide that you want to pay it in that amount of time, and then work towards making that happen.

Do you want to pay it off in 5 to 10 years? Are you willing to take a bit longer if necessary?

If you’re still not sure, go back to your reason for buying. If you are buying a first home, then you might opt to pay it off in 5 to 10 years. If you’re buying a family home, maybe you’re ok with buying something at a higher price so that you can get the right property and pay it off over a longer period of time, such as 12 or 15 years.

The only way to actually pay a home loan off faster is to have a goal for how long you want to pay it off for and then make repayments in line with that (you’ll find out how to work this out shortly). And don’t worry, you can change your ‘when’ later too if you need to.

So, right now, write down how many years you would like to pay your home loan off in (this may change, but it’s good to start somewhere):

I would like to pay my home loan off in _________ years.

Once you know this, it’s time to start working towards working out how much you can borrow.