Australia’s Reserve Bank had just announced another interest rate hike last month when truck driver Rich Guillaumier got a letter from his bank that has been rolling in his head ever since.
The note revealed that he had just settled the remaining balance on his 30-year mortgage – a good 20 years early – and now owned his three-bedroom Melbourne house in full.
Mr Guillaumier said it was a major inflection point for him, a reality that hadn’t fully set in until then.
“It was the most amazing feeling,” he said. “I hadn’t thought through just what it meant until that moment.
“I realised I was now free. I could lose my job, my income could change, but I would still have the house. I can’t really describe that feeling. It’s such a relief, like a huge weight suddenly gone.”
Truck driver Rich Guillaumier, 39, paid off his Melton house 20 years early.
The 39-year-old stepfather of three said paying off his home early was the culmination of a dedicated strategy born out of desperation.
Mr Guillaumier had been made redundant only a few years before, off the back of racking up $40,000 in credit card and car loan debt.
MORE: ‘Greedy’: Albo’s tax reform to spark 30pc hike
It was then that he realised something needed to change and he committed to a new financial plan aimed, initially, at building his wealth through investments. He got a new job and paying down his debts, with an eye to investing in shares once his smaller debts were settled.
“Paying off my home loan early was not the original goal,” he said, adding that he had long figured his options were limited given his modest income.
“I am not a high income earner. I don’t get some $700,000 a year CEO salary. I am a truck driver … for me to build wealth I had to work my ass off.”
![Australia Announces Suspension Truck Levy And Fuel Excise Due To Iran Conflict](data:image/svg+xml,%3Csvg xmlns="http://www.w3.org/2000/svg" viewBox="0 0 1280 720"%3E%3C/svg%3E)
Mr Guillaumier said he works nights hauling trucks from Melbourne to regional Victoria. He boosted his income by working overtime. Picture: George Chan
MORE: 50 hikes in 15 days: Aussies smashed as banks move
Mr Guillaumier said paying off his home loan early relied on three pillars.
He began working 60-70 hours weeks to boost his income, started living more frugally to increase his savings and took a more active approach to investing by using an app.
Using an app called Raiz, the truck driver started by investing about $50 a day into ETFs, later increasing this to $75 and then $100. He also dabbled in bitcoin investing.
Rather than trying to beat the market, Mr Guillaumier relied on what he called “plain vanilla” ETFs tracking the ASX 200 and S&P 500.
He added that his family stopped going on holidays to save cash faster. His savings also got a boost when his wife, who was not been working in the early days of his investing, returned to work.
All this occurred as he continued to pay down the debt on his mortgage.
MORE: Extra financial blow for 15 million Aussies
Raiz director Brendan Malone said Aussies were looking for new ways to build their wealth.
His portfolio value peaked at about $280,000 after about eight years, which he used to pay down the remaining debt of $120,000 on his home in the Melbourne suburb of Melton.
The original value of the mortgage was $230,000 against a purchase price of $280,000 paid in 2015.
“It was all pretty simple. But simple doesn’t mean it was easy,” he said.
“It’s seeing a wall in front of you, you pick up a sledgehammer and start to swing. It was brute force, grinding through it as fast as I could. It just takes a lot of time and discipline.”
Mr Guillaumier said he was left with a healthy balance in his investment account and plans to continue investing in ETFs until his portfolio is worth about $1 million.
Raiz Invest managing director and CEO Brendan Malone said Aussies were increasingly looking for ways to build wealth on the side.
He noted that the Raiz platform had seen a spike of around 3,000 new sign-ups a week as Aussies looked to get ahead.
MORE: $2m home reduced to biohazard by tenants from hell
Canstar insights director Sally Tindall said now was a good time for homeowners to review their rates. Picture: Tim Hunter
Canstar insights director Sally Tindall said now was a good time for homeowners to haggle with their banks for a better interest rate, which would help pay off the loan quicker in the long term.
“Arm yourself with some bargaining chips,” she said. “Firstly, check what your bank is offering new customers for the exact same loan. If it’s lower, there’s your first bargaining chip.
“Next, find two banks offering a lower rate for the same type of loan … which could be enough to open the negotiations.”
Ms Tindall also suggested homeowners consider equity creep.
After a year of rising property prices, many Australians now have far more equity than when they last reviewed their loan, even if they haven’t made extra repayments.
Truck driver Rich Guillaumier said ETFs helped him pay off his mortgage.
That matters because banks price loans based on risk, and lower loan-to-value ratios often unlock sharper rates, Ms Tindall said.
Mr Guillaumier said his payment strategy would be harder to pull off at current home prices, but he said building wealth through investing would still be effective at bringing the mortgage balance down much faster.
“You don’t realise how much of a restriction a mortgage really is until you pay it off. It’s the best feeling.”
