# How many years to be mortgage free?



## Mockingbird (Apr 29, 2009)

I've recently read a story about a couple who paid off their principal mortgage in 3 years. 

"How we paid off our house in three years"
http://www.canadianbusiness.com/my_money/investing/article.jsp?content=20060704_150040_5240&page=1

I know this story is rather extreme, but what is your personal goal for paying down the mortgage? (aside from HELOC)
If already completed, how many years did it take you?


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## mfd (Apr 3, 2009)

darn I was trying to find that story for the article I referenced in this post http://www.canadianmoneyforum.com/showthread.php?t=312

I would say 15 years if it wasn't for the fact that we intend to move in the next 3 to 4 years and probably take on a larger mortgage.


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## George (Apr 3, 2009)

Within 10 years, no question. Ideally within 6 years or so - it all depends on how much we toss toward the principal as prepayments.

Total time with a mortgage: between 11 and 14 years... not bad at all.


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## FrugalTrader (Oct 13, 2008)

Mockingbird said:


> I've recently read a story about a couple who paid off their principal mortgage in 3 years.
> 
> "How we paid off our house in three years"
> http://www.canadianbusiness.com/my_money/investing/article.jsp?content=20060704_150040_5240&page=1
> ...


We hope to have our mortgage paid off in 2 years, which will make it 3 years in total.


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## DrStan (Apr 5, 2009)

Mockingbird said:


> I've recently read a story about a couple who paid off their principal mortgage in 3 years.
> 
> "How we paid off our house in three years"
> http://www.canadianbusiness.com/my_money/investing/article.jsp?content=20060704_150040_5240&page=1
> ...


We did it. Mortgage on our first house paid off in 22 months ($100,000). Then moved to a new house with a $59,000 mortgage, paid off in 16 months. At 31, we're mortgage free and the house is worth about $320K. It's fantastic. I love hearing my friends talk about how much of their income is going towards their mortgages that will be paid off in X years. The sacrifices and hard work were well worth it! Now I can borrow a bit from home equity at preferred rates to invest in high yielding equities.


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## DAvid (Apr 3, 2009)

No option for paid off mortgages?


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## Rickson9 (Apr 9, 2009)

There should be an option for "already mortgage free".


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## Mockingbird (Apr 29, 2009)

FrugalTrader said:


> We hope to have our mortgage paid off in 2 years, which will make it 3 years in total.





DrStan said:


> We did it. Mortgage on our first house paid off in 22 months ($100,000).....


Wow, very impressive FT and DrStan.  You guys should in MoneySense article also.





Mockingbird said:


> If already completed, how many years did it take you?


DAvid & Rickson9, you can still vote. 
If never had mortgage, then that's a different story.


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## Sampson (Apr 3, 2009)

Hmm, looks like I'm taking the longest?

After we get to a lower rate next week, we should have our principle residence paid off in 11 more years, so 13 in total.

But we've already upgraded - our first condo would have been paid off in 5 - only because it was a closed mortgage with only 20% prepayment available. We were really conservative with our first place and could have paid it out upfront (before the boom ).


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## takingprofits (Apr 13, 2009)

We bought our home (new from builder) with 10% down and paid it off in 11 years.


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## Ben (Apr 3, 2009)

Length of time left to pay off our mortgage is highly dependent on several things for us (and for all of you as well, I expect). At current payment rate, 15 years - we are prioritizing cash savings at the moment, until early fall. Then, we will go back to a payment rate yielding less than 10 years. With the amount of prepayments we make, it could actually be 5 years before discharged, under current conditions. However, one never knows how the years will go. Having children would certainly mess with any projections I happened to make today. And while I quite enjoy the house I'm in, who knows what 5-10 years might do to my tastes and desired lifestyle? A bigger house would mean jumping back on the mortgage treadmill.

So, there's my complicated response to a simple question!


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## DrStan (Apr 5, 2009)

Mockingbird said:


> Wow, very impressive FT and DrStan.  You guys should in MoneySense article also.
> 
> 
> The math was pretty compelling and the timing was fabulous because I received a huge contract to be done as a sideline over a 2-year period. This required about 50 hours a week, not including my regular work, but was sufficient to pay off the mortgage. Well worth it, and a good argument for secondary sources of income!


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## michika (Apr 20, 2009)

Right now we looking at 18 years, however assuming we can make a few planned for changes in the next couple of years, we're looking at under 12 years, but we're hoping to do it in under 7.


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## Alexandra (Apr 3, 2009)

There should also be an option for "Never".

We have a tenant in our basement, and my husband uses a big part of the main floor as his office. The tax benefits we get from writing off the interest payments on a large part of our mortgage make it more beneficial for us to continue paying a mortgage for this house and invest the tax savings, than to pay it off. 

We also have a 40-year mortgage. We will have moved into another house LONG before it's ever paid off.


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## George (Apr 3, 2009)

Alexandra said:


> There should also be an option for "Never".
> 
> We have a tenant in our basement, and my husband uses a big part of the main floor as his office. The tax benefits we get from writing off the interest payments on a large part of our mortgage make it more beneficial for us to continue paying a mortgage for this house and invest the tax savings, than to pay it off.
> 
> We also have a 40-year mortgage. We will have moved into another house LONG before it's ever paid off.


I've never quite understood this argument. Even if your mortgage is 100% deductible (which it isn't - only a portion can be deducted if it's for business use), the math still doesn't add up.

If you have a $200,000 mortgage at a 5% interest rate, you're paying approximately $10,000 in interest each year. At a 40% tax rate, a $10,000 deduction will net you a $4000 tax refund, assuming the *entire* mortgage is tax-deductible. More than likely, less than 40% of the home is being used for business purposes, meaning that the deduction would be more like $4000 for a $1600 refund.

In essence, you're paying the bank $10,000 so that the government will refund you about $1600 of your taxes. Why do you think this is a good idea?


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## lazy cdn (Apr 3, 2009)

i hope i never pay of my mortgage.
its a tax deductible mortgage, proceeds which i used to buy dividend paying stock.


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## Phalene (Apr 3, 2009)

We have exactly 35 years left on our mortgage (lol, yes, we have a 5% down 40 year mortgage). I'm hoping to pay it off in 10, though- we're with ING, and can make prepayments every month if we so choose. We've already managed to shave more than 3 years off the amortization through payments, and I'm currently a student and DH has only been working 2 years. I think we're doing okay so far!


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## gwcanuck (Apr 27, 2009)

This year!


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## GregR (Apr 10, 2009)

Started with a 25 year mortgage in June 2007.

Two kids later, down to a single income, $13,000 in reno's later and we have 12.7 years left.

But hope to be done in 8 years with any luck and getting back to a double income when kids are in shcool (4 years down the road)


https://www.networthiq.com/people/GregR


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## Four Pillars (Apr 5, 2009)

I'm hoping to have it paid off in about 5 or 6 years - but that's not written in stone - just a nice goal.


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## Shayne (Apr 3, 2009)

Shooting for July 3, 2013. Pay off mortgage and leave my nice government job and pension for greener pastures.


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## Alexandra (Apr 3, 2009)

George said:


> I've never quite understood this argument. Even if your mortgage is 100% deductible (which it isn't - only a portion can be deducted if it's for business use), the math still doesn't add up.
> 
> If you have a $200,000 mortgage at a 5% interest rate, you're paying approximately $10,000 in interest each year. At a 40% tax rate, a $10,000 deduction will net you a $4000 tax refund, assuming the *entire* mortgage is tax-deductible. More than likely, less than 40% of the home is being used for business purposes, meaning that the deduction would be more like $4000 for a $1600 refund.
> 
> In essence, you're paying the bank $10,000 so that the government will refund you about $1600 of your taxes. Why do you think this is a good idea?



I guess it's a matter of priority. We have two RSSP's one RESP and two TFSA's to max out before we worry about speeding up the payments of a mortgage that gives us some tax advantages anyway. Besides, this is not the house we will be retiring in - 20 years from now we will definitely be downsizing to a smaller home, which the proceeds of the sale of our much larger (and value-appreciated) house will very likely pay for completely.


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## Jon Chevreau (Apr 4, 2009)

It was so long ago but it took six or seven years if memory serves to pay down a $170,000 mortgage taken on in 1989 at 11.75% interest. Each year we paid down $17,000, which seemed like a lot at the time but each of those payments saved double that in interest payments. We also had high weekly payments. 

This experience was fictionalized as part of a chapter of Findependence Day, where the character Theo repeatedly expounds that "The foundation of financial independence is a paid-for home."

The Post ran an excerpt of that late in 2008, headlined The Mortgage Mantra, which may no longer be on the web. However, a real estate company did archive it here:

http://www.century21.ca/jeremie.zib...onathan_Chevreau_s_new_book_Findependence_Day

And more info here: 

www.financialpost.com/fd


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## ethos1 (Apr 4, 2009)

Mockingbird said:


> I've recently read a story about a couple who paid off their principal mortgage in 3 years.
> 
> "How we paid off our house in three years"
> http://www.canadianbusiness.com/my_money/investing/article.jsp?content=20060704_150040_5240&page=1
> ...


I would not say that it is extreme - but easily doable

I advocate paying the mortgage off first before doing RRSP's and TFSA's. Take all of any disposable income and trash the debt first

That piece in CB was about two working (flogging themselves to death for a short period), & no kids, not everyone has the same fortune or luck

In our case our first place that we lived in (& renting part of it) was paid off in 3-years, second was cash and the rest the same

The investment property we currently own is 100% leveraged for a walk away if need be

More money made in or from R.E than the stock market


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## FinancialJungle (Apr 22, 2009)

ethos1 said:


> I advocate paying the mortgage off first before doing RRSP's and TFSA's. Take all of any disposable income and trash the debt first


Would it not make sense to contribute to RRSP regularly at top marginal rates, and use the refunds to pay down the mortgage? I'd think it's less effective to catch up on RRSP using lumpsums later, although I haven't crunched the numbers.

We recently sold our place, but it'd have taken 7 years to pay off. Vancouverites have a huge disadvantage due to the above national average housing costs and lower rental return. 3-year seems virtually impossible to attain. Even a 2 bedroom downtown condo costs ~$500,000. Very few can pay that off in 3 years.


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## FrugalTrader (Oct 13, 2008)

FinancialJungle said:


> Would it not make sense to contribute to RRSP regularly at top marginal rates, and use the refunds to pay down the mortgage? I'd think it's less effective to catch up on RRSP using lumpsums later, although I haven't crunched the numbers.
> 
> We recently sold our place, but it'd have taken 7 years to pay off. Vancouverites have a huge disadvantage due to the above national average housing costs and lower rental return. 3-year seems virtually impossible to attain. Even a 2 bedroom downtown condo costs ~$500,000. Very few can pay that off in 3 years.


FJ, did you sell your place b/c you felt the market was overheated?


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## FinancialJungle (Apr 22, 2009)

FrugalTrader said:


> FJ, did you sell your place b/c you felt the market was overheated?


We sold to move closer to work. The commute was costing us $300/month and 2 hours per day.


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## ethos1 (Apr 4, 2009)

FinancialJungle said:


> Would it not make sense to contribute to RRSP regularly at top marginal rates, and use the refunds to pay down the mortgage? I'd think it's less effective to catch up on RRSP using lumpsums later, although I haven't crunched the numbers.
> 
> .


 if folks are disciplined - Yes

Most would spend the refund, some may throw it right back to the RRSP, however getting rid of debt first by paying off the mrtgage with any access cash flow (before RRSP'ing) would make sense too me

Even if doing this the mortgage is paid off in 3-5 years and for the next 20, 30 years you spend every penny of access cash not going into a mortgage or RRSP/TFSA the home would probably double in price all without paying 25-years worth of mortage that works out to double the original price

The other option is once the house is paid off + 10-years, sell the house, downsize, take the access cash from the sell - buy and feed the RRSP/TFSA or go live the early retirement lifestyle


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## geewilickers (May 21, 2009)

0.

Saved 3 years of income living with my parents and paid off my condo in full when I purchased it.


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## Rickson9 (Apr 9, 2009)

geewilickers said:


> Saved 3 years of income living with my parents and paid off my condo in full when I purchased it.


Very nice!


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