How To Pay Off Your Mortgage Early

Pay Mortgage Fast

This is a guest post from Mr. CBB at Canadian Budget Binder

Paying off your mortgage early is a lofty goal, but it can be done. My wife and I are in our mid 30’s and enjoy each day as it comes our way. Like most people, we went to school (in fact, both of us graduated twice in different fields).

I moved to Canada in 2007 from the UK and although I often think of what I miss (mainly family, proper yogurt, cheese and fish & chips), I’m grateful for the opportunities given to me here in Canada.

I was very cautious with my money from a young age, as my parents taught me that I had to work for what I desired. Success was only a part of what I wanted out of life and this is when I began to understand the meaning of “paving the way”.

I bought my first home at a very young age with money I had saved, then went on to purchase a second and third home. In Canada, I ventured into coupons. We are stocked up on almost all “essential to us” non-food items for a good few years (some will likely last up to 5 years).

Canadian coupon savings were part of our “pay down the mortgage” plan, and the savings will continue to fund other adventures in our life.

Living a minimalistic life to save money for your future (or to achieve your goals, such as becoming mortgage free) is not a bad idea, as long as you balance it with the present.

Enjoy your life now because money isn’t everything, unless you plan to be buried in it. In order for our budget to balance, my wife and I both work together to make sure we spend less than we earn.

I save my allowance if I want beer or coffee, and pay cash for tools and gadgets we need (okay, I need). We both enjoy shopping for bargains and will jump at the chance to get something free, but we also like to give back to those in need.

My best financial tip to pay off your mortgage early is to budget – but this is only part of an overall umbrella of personal finance.

These are the top ways we paid off our mortgage early:

Budgeting

Set up a budget so you know where your money is going, and always pay yourself first.

Budget Canada

Coupons

Use coupons whenever you can to save money. Use that money to pay down your mortgage.

Extra Mortgage Payments

Dump extra money on your mortgage or make extra payments each month or year. Pay your mortgage weekly or bi-weekly.

Making Extra Money

Participate in focus groups, online surveys and rewards programs. Sell things. Do what ever you can to pocket some extra cash. Make money online or outside the home.

Cook From Scratch

Buy less convenience type foods, grow a garden if you can and cook homemade meals. Even freezer cooking has helped many families save money.

Cook From Scratch

Spend Less Than You Earn

Hang out with like-minded people and don’t spend money you haven’t yet earned. This is very important, especially if you are easily swayed into spending money you don’t yet have or simply spending because you want to be “just like everyone else”.

We are in the process of paying our mortgage off early right now and are thankful everyday for the frugal living lifestyle we choose to live.

So, although you may think that you will never pay your mortgage or debt off early, take a moment to educate yourself, set goals, get organized and start a budget today.

Anything is possible.

Mr. CBB is the voice behind the blog at Canadian Budget Binder. He can be serious, passionate and a bit quirky, but loves his fans and helping others save money. You may also find him whipping up a meal or treat in the kitchen or posting his shops in The Grocery Game Challenge. Join him daily on Facebook, Twitter and Pinterest.

Posted on, December 19, 2012
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Comments
  1. teachermum says:

    We too paid off our mortgage early, in 5 years on a single income with interest rates at 11.5%! It can be done if it is a priority. Nor have we had car payments since about then. For comparison, our home value was about double my husband’s salary at the time. We have always saved 10% as well for things like a new roof, replacing vehicles, and some likely went toward the 10% down.

    It helps that we had a 34% downpayment, did not overbuy/overmortgage at the rate the bank said we could have afforded (seriously, I’d love to see a budget they make up on that amount!), paid weekly, doubled up on our payments the first year as I was collecting unemployment and had a short term job-any extra was mine to spend (which didn’t amount to that much-paid for a bit of dental work), always paid the 10% down we were allowed yearly.

    We had 2 kids during that time as well but live a very frugal lifestyle, still do. We really don’t eat out, ask for clothes for Christmas gifts, clothed the kids in hand-me-downs or mainly Eaton’s balloon days bargain racks (and didn’t overbuy), had the same furniture that we brought into the marriage (actually still have some 26 years later!). We still don’t spend money needlessly and are basically homebodies.

    I’m quite certain not having kids in hockey through the years allowed us to make a yearly family trip to Disney most of the past 15 years–a very frugal Disney trip but a trip nonetheless. Basically that has been our big extravagance and memories I wouldn’t trade for anything!

    I have a dream home planned in my head…but the thought of having a mortgage once again, even though we could easily afford it, does keep one from jumping into anything! That and I don’t think Mike Holmes has time to build it…and how on earth do you find a contractor who doesn’t cut corners at every opportunity!

    • Good for you! One really has to be focused at the goal here especially if paying off their mortgage is what they want. Like you this is not our dream home but it does almost everything we wanted when we went looking. Mainly a bigger plot of land is what we would be looking for but is it really worth taking on a new mortgage. I understand where you are coming from about the dream home. Thanks for sharing your story! Mr.CBB

  2. Dennis says:

    I always do 25% down for personal comfort (and its a like round number). I have learned with my most recent home that weekly payments is a small step better than bi-weekly. Variable beats fix interest rates 90% of the time in the long term. And I have a a 35 year amortization but I over pay to be done in less than half that time, but still have the flexibility to pay the minimum if a job loss or something unexpected happens. When paid off, you can take out another small and affordable mortgage on that paid off house (as mortgage interest is less than a LOC), and invest the money and the interest will be tax deductible. Becareful though as this is leveraging and can carry risk depending on the investment

    • Hi Dennis,
      I believe we put around 30% down on our house but we didn’t put all our savings down as we didn’t want to lose all the liquidity. Our house can now sell for around 100k more than we bought it for which is great but again is it worth it to get a bigger home with another mortgage. Questions we can only answer I suppose although we are very happy here at the moment. Besides bigger home means bigger everything else and more work. is that similar to the Smith Manouver what you are talking about?

  3. I’ve become bolder over time when people complain about how much they’ve paid on their mortgage and how little the principle has dropped, explaining the basic math behind it and how much of a difference an extra $20 or $50 a month can make on a 30 year!
    We are on track to pay off our place in 5.5 years total. Woohoo!
    I think the timeframe is just so long on mortgages that most people seem to take it as a given and not even realize how expensive all that interest will be.

    • Hey Anne! Thanks for dropping in to read and comment on my guest post mate. That’s awesome news that you will have your house paid in 5.5 years.. wow. What will you do then? People always ask us that question. Yes mortgage is very costly and if people don’t know what’s going on behind the scenes they are sadly unaware of what the true cost of their home will be. Mr.CBB

  4. Pauline says:

    Great post Mr CBB! I find it very motivating to use those calculators that tell you how much interest you save by making extra payments. Something as insignificant as $10 per week can have a great impact on the total interest repaid.

    • Hey Mate,
      Just found your comment now. You and I both bought our homes at a very young age so you know as well as I that every penny counts when it comes to mortgages. You are a testament that with paying off your mortgage it opens up new opportunities. You are so young and are working on one of the biggest housing projects of anyone I know. You are an inspiration to many Pauline. Cheers!! CBB

  5. Kay says:

    Does anyone live in Toronto who paid off there mortgage in 5 years? It just doesn’t seem possible to pay off a $500,000 mortgage in 5 years.

  6. Marta says:

    I think it’s unfortunate that they don’t educate kids at a younger age on the basics of budget management and so many don’t know what a difference it makes to pay even those ten additional dollars every week. I personally don’t like debt and wanted to ensure I can pay off my mortgage as soon as possible. I went with RBC for my mortgage and I’m able to do 3 things with my mortgage: 1) increase weekly payments by 10% every year 2) put down an additional 10% one time payment during the year 3) double my payments as I wish

    The reality is not everyone can take advantage of all three options at the same time (depends on your income, mortgage size, etc) but people need to see that even the smallest change in your payments can significantly reduce the life of the mortgage.

    • Hi Marta! I agree not everyone can take advantage of all the options BUT even the smallest extra payments that are made make a big difference. That is essentially what we did. I just finished writing a post on how to budget with your children and to teach them about money from a young age. I believe it is crucial for parents to recognize the importance of money-management and their children. Cheers! MR.CBB

  7. Kodi says:

    Hi Angela, my email is kodi_14@hotmail.com….by all means I am not an expert at mortgages, but I can send you in the right direction of how to calculate the difference it makes by weighing your different options etc, just love to help people save money :)

  8. Angela says:

    Hi Kodi, I was really encouraged after reading your comments. We recently bought our first home but we endeavour to pay it off early. We need all the help you can offer. Please dont hestitate to offer any. Thanks

  9. Wow, that’s good for you!! We bought in 2009 when the rates were coming down although they went down even further. We will be breaking our mortgage in the New Year and paying the $2600 penalty to pay it in full. Like you we were sickened to see how much interest we were paying. It motivated us to cut the budget but still have fun whilst paying it down. We paid extra every month and saved on the side. Was it worth , you bet. I look into ING if we buy an investment house another topic for Mrs.CBB and I as we would like to be landlords as well. So many options open up in life it’s great! I’d like to learn more about ING if you want to get in touch with me that would be lovely. Cheers Mr.CBB

  10. Hi Mariane,
    That’s great that you were able to pay off your mortgage so fast. Like you Mrs.CBB and I have contemplated moving to a bigger home but not at the moment. The hard part is knowing we will have a mortgage again. I think once I move up in my new career and know what direction I’m headed that will offer more vision for us. Thanks for your comment and sharing your success! Mr.CBB

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