I thought it would be interesting to share the tale of how I (well, Mr. Canuck Buck helped ) paid the mortgage off for my first house in less than 5 years. There were a number of factors that helped, and hopefully these can help you buy and pay off your house faster too!
1. We bought well within our price range. I think we were approved for something like up to 400,000 dollars, but ended up with a house that cost 203,000 dollars instead. So my tip here is – buy what you can reasonably afford, not the maximum the bank will let you borrow! Sure, something bigger would have been nicer, but the plus side was we got out of hosting family dinners for years.
2. We put down a fairly generous down payment – a total of 80,000 of our own funds plus 20,000 borrowed from my parents. I pulled some out of my RRSPs, some out of my savings, and some from an inheritance I’d received from my grandmother years ago. I realize this is a lot of money, and not realistic for everyone, but the tip here is that the bigger a down payment you can scrape together, the better.
3. We went the accelerated bi-weekly payment route, and also put lump sums down at the end of each year. Paying bi-weekly ensures you put down more money per year than if you pay monthly, and the lump sums really eat away at the principal. I could have gone the route of increasing our payments instead of just saving up for lump sums, but I liked the freedom to keep the cash on hand for a while just in case we needed it. I kept it in a high interest savings account so it was at least earning something.
4. We both made it a priority. I was paying the mortgage and put down the entire down payment, but Mr. Canuck Buck gave me money every month to put towards the lump sum payments. If you want to pay your house off quickly, you have to make it a priority.
5. We watched our money in other places. We got engaged just after we bought the house, but we kept our wedding on a budget, as well as the honeymoon, in order to keep on our goal of paying off the house.
What’s your tip for helping pay off your mortgage quickly?