My husband and I just recently paid off our mortgage! It took us less than 10 years. We are 40-year-old Canadians, have 3 kids and now we own our home. When we bought our half a million-dollar home in 2012, we both agreed that it cannot take us 25 years to pay it off. We set a goal to pay off it soon as we can and there was nothing out of the ordinary about our method. I will share some of the things we did to do this and I hope to inspire you to pay off your mortgage faster.
Disclaimer: I am not a financial planner or expert. All information in the post is based on my research, opinion and experiences. Any action you take based on the recommendations from this blog is at your discretion.
The #1 Mortage Strategy
The number one strategy we used to pay off our mortgage faster was to plan for it. We set a goal that we wanted to pay it off asap and yet make our budget balance. Even though we did allocate more than the minimum payment for the mortgage, we made sure we had the money for other things. We continued to contribute to our emergency fund, our retirement and kids’ education funds and we saved money for fun things too.
How we paid off our mortgage:
We bought a home within our means and I had used a budget to make sure we can afford to buy our new home. We put the required 20% down payment to avoid the CMHC fees.
We increased our set mortgage payments when we could. During the last 2 years, we were able to double up on our biweekly payments and be able to throw in a lump sum payment when we had extra cash (tax refunds, work bonuses, and cash gifts).
Tracking how much time we had left on the mortgage was very helpful. Every time we put extra cash towards the mortgage, the money went directly to paying down the principal. It was neat to use a mortgage calculator to see how much time it shaved off with each lump sum payment.
It was helpful that we had no restrictions on how often we can put in a lump sum for the mortgage and that I can do it myself online. It was convenient. I feel that if I had to call the bank each time or if the bank restricted how often we can make a payment, I’m sure it would’ve slowed us down.
I have to admit that COVID had helped us cross the finish line faster. Since we could not travel, our vacation fund did not need to be topped up. From the start of COVID, my husband had to work from home. This allowed us to pay less for childcare and save money on gas and car insurance. We ate out less and we did not go out much due to the pandemic restrictions.
The Mortgage Journey
The beginning
When we first got into the mortgage there were lots of new words that I didn’t know and had to sign so many documents. I learned what the numbers mean and how to navigate online banking for the mortgage. For a first-time homeowner, it was definitely a big learning curve!
The middle
We renewed our mortgage after 5 years. We shopped around for rates but ultimately stayed with the same bank for convenience. The mortgage was all set up and I loved how we can make lump sum payments at any time and can change the biweekly payments up to two times a year.
The one change we did was reduce the amortization period from 25 years down to 10 years. This increased the minimum bi-weekly payments but it had shaved off more time to bring us closer to being mortgage-free.
The last leg of the journey
We decided to pay off the mortgage 5 months sooner than the 5-year term that we were locked in. We had sold our rental property and used the leftover money (very little as we lost money in this venture) to pay off the remaining loan. Due to breaking our fixed 5-year term, we had to pay a $110 penalty to the bank. However, we saved more money in interest and we are now done! Goal reached!
Our next money goals
Now that the mortgage is paid off, we came up with new goals! We are planning on buying an electric car and having solar panels installed on our house. I call these our “green projects”. We will continue to contribute to our retirement and kids’ education funds. Now that our kids are of travelling age (where I am comfortable taking 3 kiddos on an airplane), we want to plan for annual family vacations. After we pay off these “green projects”, we will have the option to work a bit less.
I updated our budget to plan and execute how we will work towards these goals. We came back to the same very step when we started with the mortgage. A goal and then a plan.
Do what works for you and your family, but I encourage you to pay off your mortgage faster. This is to ultimately save money by paying the bank less interest. Don’t give the bank more of your money than necessary. Use your budget and a mortgage calculator to help you figure out the numbers.
Set a goal and be intentional with what you do with your money. Start today.
PIN FOR LATER
You may also like:
9+ Smart Money Saving Tips for Families
Calculate Your Net Worth
Other MONEY tips
0 0 votes
Article Rating
