Practical ideas to pay off the mortgage early

Less than two years ago I set a goal to pay off the mortgage early: Before the age of 31. This was an ambitious goal to say the least. Not only am I a single, first-time homebuyer, I also live in the second most expensive housing market in Canada, Toronto.

I bought my home at a younger age than most Canadians, 27 years old (according to a BMO poll, the average age of Canadians buying their first home is 36 years old). I purchased a modest home in the suburbs of Toronto for $425,000. I made a considerable down payment of $170,000, leaving me with a mortgage of $255,000.

On Tuesday, September 22, 2015, my dreams of mortgage freedom became a reality when I made my very last mortgage payment. I managed to pay down my mortgage in a little over three years on my own (I didn’t receive any inheritance or financial assistance from my family). To celebrate this momentous occasion, I threw a mortgage burning party for the ages with my friends and family.

Paying off your house sooner

There are two simple ways to pay off the mortgage early: increase your income and reduce your expenses. While that may sound simple, it’s easier said than done. Many of us fall victim to lifestyle inflation. When we get a raise at work, instead of putting that money towards debt repayment, we buy a fancier car or a bigger house.

Related article: Practical ways to increase your income

After graduating from university, I continued to live like a student. I biked to work, packed my lunch and cooked meals at home. To bring in extra money, I rented out the upstairs of my house, living in the basement, and I’m a freelance writer. While this approach may not work for everyone, it’s worth looking at your family’s budget and figuring out places to cut back. If you’re spending $100 a month on cable TV and only watching five hours of TV a week, does it really make sense? Saving even $50 a month can go a long way to debt repayment.

Achieving financial independence

There seems to lack a general consensus on the definition of financial independence or “independence,” a term coined by financial columnist Jon Chevreau. MoneySense has an interesting article appropriately named the elusive definition of financial independence. Although there’s no official definition of financial independence, a paid-off house is a good start.

In a recent interview with MoneySense, I provided my own definition of financial independence. I see it as being able to live off the income of your assets without working a regular job. In that sense, I’ve achieved financial independence. Without a mortgage to pay, my rental income is more than enough to cover the household expenses. That doesn’t mean I’m going to quit my job tomorrow. I still have other goals I’d like to achieve, such as a net worth of $1 million by age 35. I also plan to build up my investible assets (right now I’m house rich, cash poor).

Paying off debt before retirement

My main goal for paying off my house so soon was financial freedom. I didn’t like the idea of six figures of debt hanging over my head for the next 25 years. With my mortgage paid off, I can build up my investments, travel more, work less and enjoy life.

The ultimate financial goal for most Canadian families is debt repayment. Debt comes in many forms – car loans, student loans, lines of credit, credit card debt and mortgages. Carrying debt into retirement used to be considered taboo, but there’s a startling trend emerging. One-third of retirees are carrying debt into retirement, according to Statistics Canada.

Related article: What does financial freedom mean to you?

Carrying debt into retirement poses all sorts of risks. Sure, you can always work longer, but sometimes due to health complications, you’re not able to. That’s why I believe debt repayment should be your top priority during your working years. When you pay down debt, it provides you with a guaranteed rate of return. You could invest your money in the stock market, but there’s no guarantee you’ll achieve a higher rate of return.

My decision to focus on paying down my mortgage as quickly as possible may not make sense for everyone. When you start a family, your family’s financial resources can become strained. For some families it makes sense to take a more balanced approach: pay down your mortgage, contribute to your RRSP, TFSA and RESP. It’s important to sit down with a financial planner and figure out the best approach to take.


  1. Karthigan Srinivasan

    You have done a terrific job in managing your finances. You hit the nail on the head. The most common mistake people make when their salaries rise, their lifestyle and expenses rise along with it. Congratulations on your accomplishment of paying paying your mortgage off.

  2. Claude Mayrand

    Practical ideas to pay off the mortgage early

    I bought a house in 1984. I had 20% down payment and the mortgage interest was somewhere in the teens.

    I was self-employed with an average income and child support payments. Not wealthy by any means, but I could write off some of the house expenses because my office was in the house.

    I chose a variable rate mortgage. I don’t remember the difference with a fixed rate mortgage but it was 2 if not 3 points at the time.

    The payments I made were those of the fixed rate, allowing me to pay down the capital with the difference in payments. In those days, mortgage rates were going down constantly. I paid off the house in 4 years. That last cheque to the bank was an extraordinarily proud moment.

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