15 borrower traits I see in 10yr home loan pay offs

How are traits related to a home loan pay off?

Achieving goals and personal traits are never far apart – sport, academics, life. Traits are the distinguishing characteristics of a person. Traits make us who we are.

The borrower traits I share in this article are not part of a wide ranging, statistically significant study. I share from my 15+ years of mortgage broking, the borrower traits I observed in those who *paid off their home loan in under 10 years.

I also share some of the borrower traits I consider unhelpful when it comes to getting a home loan, let alone paying it off in under 10 years.

Do lenders look at borrower traits?

Kind of.

When you apply for a home loan, the lender assesses your creditworthiness. That is, your likely ability to pay the loan back.

Among other things, lenders use a predictor score called a credit score. A credit score is given based on your money behaviour. A report mark if you like – on your approach to money.

These forward looking indicators form part of an overall assessment when a lender assesses a home loan application.

My reverse approach

I took a reverse approach and found borrowers who had paid their home loans off in under 10 years.

Then I analysed how they did it.

As a mortgage broker who did this since 2008, I enjoyed a trusted and privileged position of being there from the start for most borrowers. I saw it all. The initial interviews and financial positions, right through to following their journey to being mortgage-free.

Now I can share how these borrowers crushed their mortgage.

You could be thinking about getting a home loan or figuring out how to pay yours back more quickly. Understanding the traits of successful borrowers might be just the inspiration you need.

Who are the borrowers who paid off their home loan?

I think these borrowers are representative of many of us. Chances are they represent you.

They are small business owners, employees, fly in fly out workers, teachers.

I found these borrowers by looking back over my 15 years of mortgage broking. These are the borrowers who cleared their home loan in under 10 yrs.

I revisited file notes, financial positions, and even re-interviewed some of them.

No conversation went like this, “….and then we looked at our banking app and saw our home loan was paid off!”

I saw themes and behaviours. They displayed these traits more prevalently than other borrowers.

So, I made a list.

The borrower traits I see

Part of my research has involved contacting some borrowers to learn more about their story. Luckily, for me and you, they were happy to share their journey – and so I have been able to pull together traits of borrowers that are now mortgage-free.

Which traits do you identify with?

1. More than money

Sitting in front of borrowers is much more than a conversation about a home loan. It is often about plans, goals and aspirations. Borrowers who have paid of their home loan early usually have answers for “their next” – be it financial goal, career move, holidays.

Answers have already been considered – such is the goal-oriented nature of these borrowers.

They turn money goals into much more than a number – health, happiness, time, opportunity, travel.

Compared to borrowers trying to keep up with mates for fear of missing out – FOMO. Buying and house, and borrowing, should be done in line with your goals and objectives – no one else’s.

2. Financially aware

These borrowers are aware of their responsibility in taking on a home loan.

Aware that interest costs can get in the way of a mortgage-free life—so not inclined to put the loan on a minimum repayment auto-pilot.

Aware they can positively impact the loan term and bring it down by being proactive with their money.

Being financial aware does not mean you need to be the expert in the room.

They asked questions.

They take on and consider advice.

Here is a short video on what I saw financially aware borrowers do well.

Compared to borrowers who do not try and understand how they can get ahead. Understanding some high-level aspects of how home loans work is needed if you want to pay if back early.

3. Financially responsible

Financially responsible borrowers are up to date with all commitments.

If they are given a loan they will pay it back—on time.

Funnily enough, I also see this characteristic in borrowers who are not great savers. Some people are better with a target to aim at.

The ‘extra’ I see in financially responsible borrowers who also pay their home loans off in under 10 years, is they also have many of the of the other traits in this list.

Compared to borrowers who ignore important mail from their credit card provider. Like the messages that say payments are past their due date.

4. Don’t get too granular

It may seem a funny thing to say but borrowers can get lost in the weeds.

Don’t get me wrong. I love detail, but there is a point where too much can be distracting.

Staying committed to the big picture – know what you spend, know what you need to repay, know what you can commit to paying extra.

Compared to complex spreadsheets detailing a $100 difference over the course of a given year. I love spreadsheets but they can come with too many assumptions. If life were as predictable as a spreadsheet, we would all be crushing it.

5. Consistent

Long term consistency of income, and so reliability, within the same industry is a trait I see in borrowers who have paid their home loan off in under 10 years. It could be commission-based, salaried or business income – either way there is history.

There is a reason banks like employment and income consistency.

My list is full of borrowers who committed to their chosen career pathway, and while they made changes – they were logical moves that helped progress their career and income.

Consistency also relates to how you use your money. Consistent payments to home loans (or offset accounts) can work – if paying your home loan early is a goal.

Compared to borrowers chasing shiny new things. You might know these people:
New salaried role – then 100% commission role – then new salaried role – then 100% commission role in another industry. Sometimes it pays off and sometimes it doesn’t.

6. Sensible spending

These borrowers spend within their means.

These borrowers know what they earn – net and gross.

Far from frugal, these are thrifty to moderate spenders who are content to pass on the shiny “must-haves” of the world.

Sure, the “one off” spendy months can happen. But when one month turns into many – lifestyle can quickly attach itself to those more spendthrift months.

Sensible spenders understanding what it costs to live a reasonable lifestyle.

Compared to spenders who always promise they can reign it in. They continue to borrow on credit to live an unsustainable lifestyle.

7. Little or no personal lending

I have met borrowers along the way who had a relatively “boring” – as in ‘good’ boring –financial position.

They rarely have personal or car loans. If I did see any car loans, they were usually considered necessary for their employment.

They might have had a student loan.

If they had credit cards, the balance was generally paid off in full each month.

I love seeing “financially boring” so much I made a video dedicated to them and their success.

Compared to borrowers with minimal savings, new cars, nice clothes, nice holidays and a lot of debt like personal loans, buy now pay later and credit cards.

8. Co-borrowers aligned

If two people are aligned, they move in the same direction. Stuff works.

In a relationship, as co-borrowers, aligned goals means decision can be made independently. No need to check in and seek permission to buy $500 shoes – it is part of your plan, or not.

Borrowers who paid off their home loan early were comfortable being on their own journey, so less influenced by others.

Here is a short video on the importance of being aligned with your co-borrower.

Compared to the very opposite. Like the newly married couple hiding money from each other – that did not end well – romantically or financially.

9. Organised

Personal organisation is a good indicator borrowers will also be up to date with finance-related things.

These borrowers can access documents needed for a home loan application quickly and easily.

If these organised borrowers also run a business , chances are it is in pretty good shape.

Compared to endless strings of correspondence chasing documents to support an application. Sometimes to the point where initial documents have expired when final documents are received!

10. Principled

They set and stick by their principles, especially around big purchases. They are clear on wants and needs and how these affected the journey towards being mortgage-free.

Their principles mean they are not swayed easily. There is a reason behind their spending, and it is not usually following along with what others are spending their money on.

Compared to the alternative being no guiding principles around debt and spending. It could end in long term debt and lots of nice things. There is not a wrong way and right way. It depends on your goals – you decide.

11. Always moving forward

These borrowers do not stop once home loan is paid off. They have financial and lifestyle goals – and paying off the home loan early was just a part of the bigger picture.

I see them buy bars of silver and gold.

I see impressive share portfolios.

I see them continue to buy property as an investment.

I see them work less.

Compared to making minimum repayments on a home loan – only. These clients work off cues from the lender rather than taking more control over their loan term trajectory.

12. Rethink sacrifice

Sacrifice is an emotive word, and these borrowers did not consider the actions taken to help pay off their home loan a “sacrifice”. Moving away for a few years, going without new cars – it was a choice rather than a sacrifice for these borrowers.

They keep their eyes on the prize.

Compared to never missing out on anything. Always having what you want versus what you need – or choose.

13. Open thinkers

They are open to doing things differently, or getting there steadily.

Instead of buying a home to live in it could be:

• Buying a first home to live in. A lower end property. Accessing grants and incentives. Maybe preserving the option to rent out as an investment in the future.
• Buying an imperfect home to live in that has the option of us adding value to improve overall equity position.

Compared to buying a forever home at any cost, which can limit future choices around holidays and private schooling.

14. Still live their life

I see these borrowers enjoying a balance they planned for. They prioritise the things they want – as opposed to wanting and getting everything.

If holidaying is an important part of their life and lifestyle – they allow for it.

Compared to going on holiday with money you do not have and getting a loan to fund it.

15. Self-sufficient

Once their initial home loan was set up, these borrowers did not need much in terms of home loan assistance – like loan top ups or refinances. The faster they paid their home loan down, the less interest rate mattered to them.

They were in control of their home loan trajectory and on their own path to a mortgage-free life.

Compared to refinancing a home loan back out to 30 years to lower repayments, free up extra cash and—costs you potentially 30 years of interest all over again.

Influences and traits

Influences are not a trait, but traits can be influenced by people around you.

If clients showed good money initiatives and principles, I often delve deeper to learn where it came from. The answer is usually one of these:

• My parents always drilled this into me.
• My parents were hopeless with money, so I don’t want to be like them.
• It was important to my partner, and I learned from them.

I see themes run in families. If one sibling has paid off their home loan, I am not surprised to find other siblings also living mortgage-free.

I see some borrowers, as well as the people they hang with, spend as quickly as they earn.

I see borrowers who mix with people who have big goals – like running a successful business, pay off home loans in under 10 years. It comes as no surprise when I see it having a positive impact on their own financial journey.

Considerations

Paying off a home loan is not always the right thing to do for your situation.

So, get professional financial and tax advice prior to making changes or embarking on your home loan journey.

I have seen several clients offset their home loan balance – I class that as effectively paying off the home loan – no interest is payable. I consider the borrower in control as the loan could be paid off tomorrow.

There are many more borrowers who could have paid off their home loans, but life happens.

There are also those who chose not to because they have a business that needs their money more than their home loan. Again – their journey.

Final word on borrower traits

I have not covered all the traits for borrowers who have paid off their home loans in under 10 years – just the ones that I observed over the years.

These borrower traits stand out to me because I have the privilege of looking backwards. I can compare behaviour patterns in borrowers who have, and haven’t, paid off their home loans.

Is having these traits a great indicator borrowers will pay off their home loan in under 10 years?
Based on the borrowers I reviewed I think so. And, if I were a lender, I would recognise these traits as predictors of good repayment conduct– and try really hard to lend these borrowers money.

*Notes to article
Observations based on my personal mortgage broking experience since 2008
The registration of the discharge of mortgage need not have happened for the classed as mortgage free for this article.
Home loans paid off, mortgage-free and similar terms used to highlight following owner-occupied home loan positions:

• Paid balance to $0 and closed home loan accounts.
• Paid balance to less than $10,000 and leave home loan account open.
• Use an offset account to offset home loan balance so net amount owing for interest calculations is less than $10,000.

The above loan positions should all have the same effect on home loan interested chargeable – in that is should be $0 to nominal.

Home loans positions analysed for borrowers who have paid off home loan in under 10 years taken from 254 current borrower groups. Observations taken from experience. More groups than this as borrowers come and go over time.