If it wasnt for a drastic change of course, John and Sandra Alpe would still have 19 years left to pay off their home loan.
Instead, theyre happily retired, living mortgage-free in their five-bedroom Auckland home, surrounded by a growing gaggle of grandchildren for whom they have all the time in the world.
John, 65, retired a few weeks ago from his full-time job as a Baptist pastor. Sandra retired from her half-time pastor role, meaning they could both relocate north from Christchurch.
Ria Akuhata lives in a van to pay off her mortgage faster
They credit the massive cut to their loan repayment time to changing the structure of their loan, cutting unnecessary spending, and committing to a plan.
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Financial Advice New Zealand chief executive Katrina Shanks says many of us obtain a mortgage and insurance, then dont review them regularly to ensure theyre still fit for purpose.
While it won’t work for everyone, it’s not unusual for financial advisers clients to find they could make some savings. Small changes can make the biggest differences, she says, such as:
- having a savings plan
- controlling your money by using different bank accounts for different expenses
- reviewing what and where you are spending on a regular basis and determining whether that spending is a priority
- structuring your mortgage effectively
- obtaining the correct insurances
The Alpes took their advice from New Zealand Home Loans (NZHL), which is Government-owned through parent company Kiwi Group Holdings, which also owns KiwiBank.
John Alpe says the home loan was like a noose and hes feeling great about retiring mortgage-free.
John said their loan was a 25-year mortgage six years ago. With standard payments, wed still have 19 years to go.
At the time, their financial position felt OK the Laingholm house was a rental property, and they were living in a two-bedroom unit in Ilam, Christchurch, near their ministry. They had downsized from a 285 square metre, four-bedroom home in Brooklands after it was red-zoned in the Christchurch earthquakes.
They had stretched themselves financially to buy a rental property in Auckland, planning to eventually retire there. Wed always planned to come back to Auckland: We left 24 years ago to pastor in Christchurch.
John says he and Sandra pinch themselves enjoying the view from their home in Laingholm.
John says he puts the decision to buy a rental in Auckland down to the God factor. He says if they had waited, they could not afford to buy there now, as house prices have risen so much.
But the couple didnt realise they could be paying off their debt faster. Banks dont tell you stuff. A thousand paid off this end is something like $15,000 at the other end.
He says he and Sandra were never extravagant spenders, but they made extra effort to live within their means, with fewer meals out and not doing things such as buying new furniture. They put all of Sandras salary and 20 per cent of Johns into a savings account, and all their accounts were offset against the loan.
John and Sandra Alpe love being able to help family out: they have three generations living in their home.
They were shown what they could save if we wanted to, despite not being high income earners. When he [Yates] analysed our finances he told us what we could save, and I found it hard to believe.
John believes the system they signed up to saved between $100,000 and $150,000 in interest payments, while an annual check-up kept them on track.
John says he would probably still be working now if he still had a mortgage: Its a noose.
Instead, having been retired for several weeks now, hes flat out unpacking boxes. The house is large enough that two of the Alpes children and their partners are living with them.
Family are needing a hand to get a deposit, so its a win-win for us, John says. We get time with the two grandkids, and it helps them.
Regular check-ins kept the couple on track with their savings.
Living with two grandchildren, his daughters 18-month-old son, and his sons newborn, was crazy busy.
It starts early in the morning. I was up at 4.30 this morning, and my daughter and her husband got up to go to a gym class before he went to work.
Theres stuff going on all the time. Its busy and its great. We love it. It could not be better for us. Weve had 10 years apart. Now we have the opportunity to really reconnect and enjoy each others company.
My wife is absolutely rapt with two grandchildren. And our other son has a baby due in October. They are only 15 minutes away.
Yates said many people were not aware of their income and outgoings, and what they were capable of.
We deal with middle New Zealand, not necessarily the high-end clients. Its your general mum and dad Kiwis we deal with.
NZHL makes its money through commissions from loan suppliers, and through insurance sales.