Giselle Whiteaker, a 54-year-old Australian woman, has shared her strategy for paying off her first home by age 37, primarily through the use of an offset mortgage. This method involves linking a savings or current account to a mortgage with the same financial institution, where the balance of the savings account reduces the principal amount on which interest is calculated.
Whiteaker purchased her initial property in Australia in the late 1990s at age 25. She explained that her property journey began in Japan after graduating university, where she participated in the Japan Exchange and Teaching Programme (JET). During her three years as an assistant English teacher in Hokkaido, she earned approximately £20,000 annually. Upon leaving Japan for Korea, she received a payout from her Japanese pension contributions, an unexpected sum she used as a deposit for her first home in Australia.
Her mother advised her to purchase property, leading Whiteaker to find a one-bedroom cottage that the seller needed to sell quickly. She made an offer of £35,000, covering the 10% deposit and associated fees with her pension refund and savings. She recalls the transaction being so tight that she withdrew the deposit in cash to avoid a banker's draft fee.
After securing the property, she informed her bank of her intention to pay off the mortgage early. They recommended an offset mortgage, which was not widely common at the time. She then moved to Korea, granting her mother power of attorney to finalize paperwork and secure a tenant for the property.
Whiteaker began systematically increasing the balance in her linked savings account. Any surplus funds, including a portion of her rental income which was less than £100 per month after her minimum mortgage repayment of £225, were transferred to the offset account. She consciously lived within her means in Korea, opting for a scooter over a car and preparing meals at home to keep costs low. This allowed her to accumulate savings faster.
Later, she cohabited in the property with her partner for a few years. They agreed to keep their finances separate, treating the property as a rental and splitting bills, with her partner paying a below-market-value rent. This arrangement further contributed to reducing her mortgage balance while they lived there.
Whiteaker continued to save and direct funds into her offset account, even as she moved to Japan and then Dubai, where her income increased. Within 12 years, with nine of those years spent overseas, the balance in her offset account had nearly covered the outstanding mortgage, leaving less than £150 owed. She was paying a minimal amount of interest, as the monthly repayments were effectively covered by her savings.
At age 37, she had the option to close the mortgage but chose to keep the account open. She viewed the accumulated savings as a financial safety net, which proved valuable during the 2009 Global Financial Crisis when she was made redundant in Dubai. She also utilized it during periods of part-time work and travel between visas, and when she returned to study with a limited income.
Approximately five years ago, she finally closed the loan account, becoming a mortgage-free homeowner. Nearly 30 years after her first property purchase, she acquired a second property in Australia for £340,000 and has again opted for an offset mortgage, anticipating paying it off early. She recommends the offset mortgage to others seeking to become debt-free sooner, particularly those who may not have extensive financial expertise.
Experts note that offset mortgages can be beneficial for individuals who regularly save, such as the self-employed who save for lump-sum tax payments, or those with surplus cash that isn't earning interest elsewhere. The primary advantage is the reduction in interest paid on the mortgage. However, a potential downside is that offset mortgages may come with slightly higher interest rates compared to standard mortgages, and withdrawing savings can negate the interest-saving benefits. Additionally, funds held in the offset account do not earn interest.