The One and Only Tip You Need to Know to Quickly Pay Off Your Mortgage
Whatever the number of bullet points you’ve seen on how to pay off your mortgage faster, you really only need to focus on ONE
“Here is the surest and fastest way to pay off your mortgage”
10 | 20 | 30 Ways to Pay Off Your Mortgage Faster…Have You Read This Before?
What’s next? 40 Ways, 50 Ways? Forget all the lists. Who can remember that many anyways?
I’ve got something better and it’s only ONE thing you need to remember and do!
This kind of article has been published and re-published year after year, website after website, author after author. I did a quick search on Google. Who are some of the big websites that have published this title? You can go ahead and read them, but, you won’t get the most important point without reading further in my article.
- https://www.canada.ca/en/financial-consumer-agency/services/mortgages/pay-mortgage-faster.html – our Federal Government!
- Every bank, every financial institution, every mortgage broker, probably every real estate agent,And now, Mortgage Crunch included!
Why Did You Click Here?
Is it because you thought there might be some other way to do it. An EASIER way. Is there some hack or trick or something you haven’t already read, year after year? Will you read that one extra bullet point that will pay off your damn mortgage that much faster?
Stop wasting your time reading all these different methods and tips!
There is only one strategy you need to know. And that knowledge alone will allow you to pay off your mortgage faster.
But, first, there are 3 things that you need to understand with a mortgage and paying it off faster.
- Time (Term and Amortization)
What Are These 3 Things?
Principal is the loan amount you are taking from your lender.
Interest is the money you owe to the lender based on the Principal amount. The lender charges you this for lending money to you.
There are two time components in a mortgage. The first is the length of time of your contract with the lender, also known as the term. The second is the length of time that your mortgage is calculated to be paid off, also known as the amortization period.
- We know that your lender will charge you a periodic (usually monthly) amount that you must pay or you can lose your home
- We know that if you pay this amount regularly, the lender is happy and you’ll be paying for years on end
- We know that the larger the principal, the longer you have to pay and the less you get to spend on better things like your premium lattes or Mexican vacation
So, what do we need to know to pay off our mortgage faster?
Here is the ONE Tip You Need to Know…
You have to pay more than what you have to
Yes that’s all.
If the lender says you have to pay $900 per month, then pay $950 or $1000. Don’t just pay what is needed, you need to pay more!
Wow, is that mind blowing! 🙂
All the other points you may have read about eliminating coffee, or creating a budget, or eating out less are just ways to save money. But, saving money won’t help unless you use it to pay more than the required amount!
Understand that! You have to utilize that money you saved to pay more than the required amount. If you use your extra savings on daily premium coffees, a new iPhone, a new XBox, or anything but your mortgage, you won’t pay it faster!
Don’t bother buying books, or attending seminars, or even taking courses! What? Courses, yes, I’ve seen that. Save your time and money. All you need to know is to pay more than what is required.
I’ve said it multiple times already and bolded it and italicized it because that is ALL you have to know.
If you don’t utilize your savings to pay extra on your mortgage, then all those “tips” to pay off your mortgage faster (which in actuality are about saving money), don’t actually work. They only save you money. It won’t pay off your mortgage faster.
It’s really that simple. If you pay more than you have to, you’ll pay off your mortgage faster.
And by truly understanding this, then you can decide if you want to reduce your daily coffee consumption, or change your vacation plans, or whatever. Maybe you don’t even have to!
What About Paying More Often?
Yes, I’m sure people have told you to pay more often. That helps a little. But, doesn’t compare to paying more than what you need to.
Paying more often is actually about paying more.
For example, when you pay $1000 every month, you’re paying $12,000 over 1 year.
When you pay $500 every 2 weeks, you’re paying $13,000 over 1 year. So, you’ve effectively paid more than what you have to, unless that was your schedule in the first place.
My Story with Mortgages
I’ve paid off two mortgages before the age of 40 and living in Toronto. I bought two homes, my first in Davisville, and the second in Willowdale. These are two of the more expensive neighbourhoods in Canada. Only for about 1 year did I make over 70k. It was about 72.5k before I quit. Otherwise, I’ve never made over $70k a year in my full time jobs.
And no, I didn’t live like a hermit or get an inheritance. My parents gave me $20k as a gift for my first home. That along with my savings is how I got things going.
I’ve gone to all-inclusive resorts 12 times in my life. I’ve travelled to Spain 3 times, Germany twice, and other parts of Europe like the UK, Greece, Italy, France, Monaco, Amsterdam, and Belgium. In the US, I’ve gone to Hawaii twice, Los Angeles multiple times, Chicago, and Florida twice.
You just have to live within your means. If you buy an expensive car, you’ll also pay expensive insurance and maybe more expensive maintenance and other ongoing expenses. I can’t be sure because I’ve never paid more than $15k for a car. Car costs are huge and can be used for other things like travelling, which is what I did.
If you’re a “car buff”, sure, that’s perfectly fine. You’re free to spend your money on what makes you happy. I’m not, so I never paid much for a car. I consider it an ongoing expense. That’s worse than a one-time expense. And I want to minimize on-going expenses – because they’re ongoing or recurring.
I also stock trade, but, I would say living within your means is the most important thing to do. Stock trading can backfire on you and ruin your plans! It’s better to invest sensibly and when you have enough money, then you can decide if you want to stock trade.
So, remember, whatever you are supposed to pay according to the mortgage schedule you get from your lender, pay MORE than what is stated. That will be the best and fastest way to pay off your mortgage sooner.
And one other thing I’d like to mention is that paying off your mortgage probably won’t be your financial freedom. It’s a start and a big obstacle that will allow you to accelerate your timeline towards financial independence once it’s gone.
See my post on: Is Living Mortgage Free, Financial Freedom?