Expert advice on how to get ahead on your mortgage as Melbourne’s loan-free suburbs revealed: SuburbTrends

Hundreds of Melbourne suburbs boast billions of dollars worth of homes that owners have already paid off. And this housing expert has tips on how you can join their ranks.

Getting ahead on a mortgage can be tough, but there are ways to do so.

Homeowners in almost 200 Melbourne suburbs are sitting on more than $1bn worth of mortgage-free residences.

Figures from real estate analytics company SuburbTrends show that Brighton households own more than $8.02bn in private residences outright, Balwyn North households more than $6.05bn in paid-off homes and Camberwell has $5.65bn-plus in mortgage-free abodes.

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More than 70 Greater Melbourne areas stretching right across the city boast more than $2bn worth of homes that are no longer subject to mortgage repayments, including Wheelers Hill, Mt Eliza, Malvern East, Greensborough, Toorak, Thomastown, Thornbury, Taylors Lakes, Dromana and Williamstown.

A further 116 suburbs have at least $1bn worth of paid-off homes.

SuburbTrends founder Kent Lardner said that areas with higher rates of mortgage freedom

could lock younger buyers out of the market by reducing housing turnover, keeping supply low and increasing competition.

“The concentration of mortgage-free property wealth risks deepening generational and socio-economic inequality,” Mr Lardner said.

“Suburbs with high outright ownership tend to have low turnover, reducing housing supply and making it harder for younger and lower-income buyers to enter.”

Suburb Trends founder Kent Lardner.

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Intergenerational wealth was now one of the biggest factors in determining homeownership, especially in high-equity suburbs, he added.

“Buyers without family financial support face longer rental periods, higher mortgage debt, and greater financial pressure,” Mr Lardner said.

“Without property wealth to pass down, younger generations may struggle to enter the market at all, increasing the divide between those who inherit property wealth and those who remain locked out.”

This leads to the question: what can homeowners, who might not have family to assist them, do to get ahead?

Evolution Financial Services & Advisory founder and director Luke Harris, who is also the Mortgage and Finance Association of Australia’s Victorian Forum Committee chair, said that anecdotally, people who have successfully paid off their home loans had either purchased a number of years prior or have put strategies in place to be able to actively reduce their debt.

When navigating home loans, it’s often handy to seek advice from an expert.

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Mr Harris’ tips for mortgage holders who want to pay off their home loan sooner rather than later include:

★ It’s important for homeowners to seek advice from an accredited mortgage broker to obtain tailored guidance for their individual situations.

★ Switching from monthly to fortnightly payments.

★ Having a loan with an offset account and having your salary paid into your offset account each month. There are now banks that allow for up to 10 offset accounts so it is still possible to set aside savings for that all important holiday, while still offsetting a home loan.

★ Change the loan term to a shorter period if you can.

★ In the event that rates decrease, keep your repayments the same as the higher rate that you were on previously.

★ Use an accredited mortgage broker who will keep up to date with the most suitable products in the market, let you know when there is a better option available and when it is time to switch banks.

Many Australians who have paid off their home are aged 60 or older.

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Mr Harris also said that he would encourage anyone who is in the position, where they have paid off their mortgage, to speak with an accredited mortgage broker to learn how to potentially build wealth through available equity in their property.

-Additional reporting by Viva Hyde

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Originally published as Expert advice on how to get ahead on your mortgage as Melbourne’s loan-free suburbs revealed: SuburbTrends