A recent poll conducted by Harris-Decima reveals that most Canadian homeowners think that they will be stuck with a mortgage until 55 years of age. This would not give them a lot of time with which to save up for their retirement.
There is a way, however, to work hard toward paying it off so that you are mortgage free before 50 – and yes, it is possible, so long as you devote yourself to the cause.
1- Make lump sum annual payments
If you have the opportunity to pay down your mortgage once a year, use it. Assuming that you can put some extra money aside each month, use it toward paying down your mortgage on an annual basis. That way, you will mortgage free by 50 guaranteed.
2- Increase the amount you pay each month
Do what you can to increase the amount of money you contribute to paying down your mortgage, in order to ensure that you pay more of the principal and less of the interest.
As little as an extra $400 a month could make a huge difference.
3- Increase the frequency of payments
Rather than pay a lump sum every month, break the payments down by two weeks and pay off more than you would normally on a monthly basis. If you do the math, biweekly payments end up giving you an extra month of payments. There are 52 weeks in a year; divide that by 2 payments each month, which equals to 13 payments per year rather than 12.
4- Refinance with a shorter term
You can refinance into a mortgage for 10, 15, or even 25 years, but if you want to pay it off quickly, then a 15-year mortgage is your best best.
An advantage of a 15-year mortgage is that it commits you to a higher payment, but they may not be much higher than you imagines. Don’t forget that the amount of interest is lowered when you cut off 10 years, again assuring that you will be mortgage free by 50.
5- Skip large purchases
Living on credit should not be a way of life and perhaps it’s time for you to take it down a notch when it comes to major purchases. You don’t really need an extra car, a 60-inch flat screen or those Jimmy Choos, so walk away and focus on what’s important.
6- Create and stick to a budget
Too often, home owners fail to budget their money and maintain within the limitations they set, thus resulting in major debt issues and perhaps even the loss of a home.
Sit down with your significant other, set out a budget based on the money you bring in and make sure that you both respect it going forward if you really want to be mortgage free before 50.
7- Cut down on extras
Take a step back and think about how much money you spend on the little luxuries – a $7 a day latte habit costs you $50 a week. Buying lunch every day instead of making it at home could cost you up to $75 a week. Add this up and you are spending an extra $500 a month just on lunch and coffee.
Think about where you spend a lot of money and consider eliminating or at least decreasing the excessive costs.
8- Vacation at home
I am a firm believer that not taking a vacation is a terrible idea, but skip a year and use that time to chill out at home with the family. There must be tons of things to do with the family in your area like swimming, zoos, museums, hiking, and more.
You can save thousands by chilling out at home once every two years.
Mortgage free before 50
Being mortgage free is a top priority for most Canadians, but being mortgage free before 50 is equally important as it will offer you ample time to figure out how much you can save before retirement. Remember that it’s not easy; 78% of Canadians who have already paid off their mortgage admitted that they made a number of sacrifices to make being mortgage free before 50 a reality.
If you are ready to buy or sell a home, visit ComFree.com today.