How to Pay Off Your Mortgage Sooner and Still Have a Holiday Season
In September 2015 I paid off my mortgage just three years after buying a home. Before you ask, no, I’m not related to Donald Trump and no, I don’t have a trust account the size of Paris Hilton’s. I did it through hard work and determination. When I celebrated this major milestone, CBC was at my mortgage burning party. My story aired on the National and has gone viral.
A lot of people asked me how I did it. I’m working on a book that provides a step by step guide. However, since it’s the holiday season I thought I’d be generous and share my story so you can hopefully follow in my footsteps.
3 Tips for Paying Off Your Mortgage Quickly
- Pay your mortgage weekly
More often than not, the default option is to pay your mortgage monthly. Instead of paying your mortgage monthly, pay it weekly. For example, instead of paying $2,000 per month, pay $500 per week. Your total payment will be the same, but you’ll pay less interest over the life of your mortgage (since you’re paying your mortgage more frequently). If weekly is too frequent, pay biweekly to match your paycheque.
- Make lump sum payments with found money
Lump sum payments are a great way to pay down your mortgage quickly. When you make lump sum payments, the money goes straight towards principal. Do this often and it can knock years off the amortization of your mortgage. Examples of found money include bonuses at work, tax refunds and freelance income.
- Round up your mortgage payments
Your mortgage is most likely the single largest debt of your lifetime, so any extra money thrown at it can make a big difference. Most mortgages come with prepayment privileges. Often times you’re able to increase your mortgage payment. By rounding up your mortgage payment, you can pay it off a lot sooner. For example, instead of paying $487 per week, round it up and pay $500 per week.
How to Still Have a Holiday Season
While paying off your mortgage early is great, it’s important to still have a holiday season. The good news is you can still pay off your mortgage sooner and enjoy the holidays. When it comes to buying presents for loved ones, it’s often the thought and not the amount you spent that counts. For example, a handmade gift often means more than a retailer gift card.
To avoid hurt feelings, it’s a good idea to set a holiday spending limit. For example, you could say you’re only going to spend a maximum of $50 on a gift. Budgeting is important, but it’s even more important during the holidays. To avoid overspending and receiving a nasty surprise in the form of a credit card statement in the mail in January, it’s important to set a budget and stick to it.
The New Heritage eGifting Program: The Perfect Gift for the Holidays
Post-secondary education isn’t cheap these days. With many students facing five figures of debt upon graduation, it’s important to make saving for your child’s education a priority. With the new Heritage eGifting Program, parents can start a campaign to help raise funds for their children. Contributing towards your child’s education is one of the best gifts a parent can offer a child. Through crowdfunding, family and friends can contribute towards the child’s education, making college or university a reality.