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Is your coffee habit adding years to your mortgage?

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Is your coffee habit adding years to your mortgage?

It’s smooth, it’s delectable, and it might just be adding years to your mortgage. The culprit? Your daily cup of joy.

A morning coffee has long been a ritual for many people– a ritual that used to take place over breakfast in the comfort of our own homes. But with the rapid pace of modern life, coffee options available around our workplaces, more and more people are getting into the habit of take-away coffee.

This might seem innocent enough, but those coffees really add up. By finding an alternative, you could shave years off your mortgage and save thousands in interest repayments.

Don’t believe? Read on.

Let’s take a look at the relative cost of different coffee options, both on a monthly basis and over the course of five years. The results may really surprise you.

Option 1: Takeaway coffee

Regardless of whether you’re getting a long black, latte or cappuccino, chances are you’re spending at least $4 a day.

Upfront cost: Nil

Price of coffee: $28/week = $121/month

Cost over five years: $7,280

Option 2: French Press or a Moka Pot

These days the coffee you drink is as much an expression of your personality as it is about the taste. So why not switch to a chic little French press or an Italiano moka pot?

For under $100 you can get a classy little table piece that will deliver a perfect cuppa time and time again.

Upfront cost: $60
Price of beans: $5/week = $22/month
Cost over five years: $1,380

Option 3: Instant coffee

A cup of powdered Nescafe might not be everyone’s idea of a sophisticated beverage, but when the mid-afternoon slump hits it can really do the trick and every employee has access to coffee at their workplace for free.

Upfront cost: Nil
Cost over five years: Nil

What is the impact?

Ok, so now we have the basic costings, let’s see what these options really mean for your mortgage.

The couple in their late 30s, with two children, paying off a mortgage. Let’s assume the couple lives in the city, where the average new household loan is $374,900 and monthly repayments are $2,586/month, at an interest rate of 4%.

Let’s also assume they are also both drinking a cup of takeaway coffee per day, so spending $242/month on caffeine.

At this current rate, they will pay off their loan in 16 years and 8 months at a total cost of $516,044.

 

How much could they save if they switched from takeaway to another option?

 

French Press/Moka Pot

A saving of $198/month means the couple could increase their repayments to $2784/month.

This means they could pay their loan off in 15 years, at a total cost of $501,078. That’s a saving of 1 year 8 months, and $14,906 (deducting the cost of the coffee pot).

 

Instant coffee

A saving of $242/month means the couple could increase their repayments to $2,828/month.

This means they could pay their loan off in 14 years 9 months, at a total cost of $495,389. That’s a saving of 1 year 11 months, and $17,161.

That’s just a drop in the cup

Of course, coffee is just the tip of the iceberg. There are many other techniques which can help to pay off your mortgage much faster.

So, consult with  “Ibadat Waraich” Mortgage Broker today on 0431316228 and email: ibadat@investorsmotgage.com.au to get started. I ’ll help you come up with a plan that will aim to shave a couple more years off your mortgage.

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