# Death of a Mortgage



## Ihatetaxes (May 5, 2010)

I am feeling excited about the pending end of my mortgage and was just looking back at the last few years and how quickly its been paid down. I keep a little memo in my Outlook program and every once in a while have noted the balance while checking my bank accounts online. Here is how its shrunk:

$279,023.32 Original amount not sure exact date
$238,993.34 Jan/07
$235,499.96 Apr/07
$216,063.54 Apr 16/08
$188,161.21 April 22/08
$172,809.53 Sept/08
$159,359.25 March 31/09
$149,385.97 July 21/09
$139,186.09 November 25/09
$126,618.79 May 5/10
$99,321.84 June 1/10 ($25k lump)
$79,321.84 June 2/10 ($20k lump)
$63,260.45 July 20/10 ($10k lump)
$54,945.09 October 29/10
$27,945.09 October 29 ($27k lump)
$15,698.92 March 17/11

Final balance to be paid off in the next month when I get a bonus.

Last year alone we paid off $112k off the principle amount - we worked hard to make that happen. I know some people would say we should have left the mortgage alone and diverted the extra cash into our investments but after a rocky road with our RSP's for a number of years we felt this was one way to get a guaranteed return and save on interest charges.

Now its time to get serious about beefing up non-registered investments.


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## OhGreatGuru (May 24, 2009)

Congrats!


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## Addy (Mar 12, 2010)

I second that, Congratulations!! I hope you do a little something to celebrate when you pay it off, after all that hard work!


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## Four Pillars (Apr 5, 2009)

Holy cow, that is something! Lots of "lumps".

We're doing a number on our mortgage - down $200k in five years. You are doing way better than us.


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## the-royal-mail (Dec 11, 2009)

Very well done! Take a bow!

My claim to fame is paying off my $21K car in 3.7 months. Nice to actually own this.


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## Plugging Along (Jan 3, 2011)

Way to go. That's quite an accomplishment. We had a similar mortgage starting in 2004, and it's only this year that we think we'll be paying it off.


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## OptsyEagle (Nov 29, 2009)

Who do you have the mortgage with or is it a HELOC or something. The lump sum payments you made in 2010 seem a little over many banks lump sum payment maximums. TD was 15% per year.


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## Ihatetaxes (May 5, 2010)

OptsyEagle said:


> Who do you have the mortgage with or is it a HELOC or something. The lump sum payments you made in 2010 seem a little over many banks lump sum payment maximums. TD was 15% per year.


Royal bank 5 year OPEN variable mortgage which allows lump payments of any amount, any time. I have had closed mortgages before with Royal that only allowed 10% lump payments per year and my banker suggested this and I am glad she did! Every time I have extra cash I just email her and she takes it and puts it against the principle. Highly recommend this type of mortgage. The rate has been prime - .15% so right now its 2.85%.

Thanks for all the positive comments guys! I must admit I am obsessed with paying the damn thing off.


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## andrewf (Mar 1, 2010)

Congrats indeed. 

Paying off the mortgage is not a bad bet at all, especially if you have a fixed rate mortgage from ~2007. At today's discount-to-prime rate of 2.1%, I'm not so sure. It's a better idea than a HISA or GIC, to be sure.


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## andrewf (Mar 1, 2010)

Ihatetaxes said:


> Royal bank 5 year OPEN variable mortgage which allows lump payments of any amount, any time. I have had closed mortgages before with Royal that only allowed 10% lump payments per year and my banker suggested this and I am glad she did! Every time I have extra cash I just email her and she takes it and puts it against the principle. Highly recommend this type of mortgage. The rate has been prime - .15% so right now its 2.85%.
> 
> Thanks for all the positive comments guys! I must admit I am obsessed with paying the damn thing off.


That only makes sense if you have a lot of extra income to make prepayments. If that's the case, I'd just reduce the amortization of the loan and go with a lender that offers 20% prepayment. The discount on prime is probably worth it.


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## bean438 (Jul 18, 2009)

Addy said:


> I second that, Congratulations!! I hope you do a little something to celebrate when you pay it off, after all that hard work!


I wouldnt say it was hard work. If you can pay down 112K in one year, they obviously have a fantastic income, which they chose to pay off a mortgage instead of "blow" it.

Nonetheless good for you.


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## Dana (Nov 17, 2009)

Wow! Congratulations! That is a great feat! How will you celebrate?


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## Ihatetaxes (May 5, 2010)

bean438 said:


> I wouldnt say it was hard work. If you can pay down 112K in one year, they obviously have a fantastic income, which they chose to pay off a mortgage instead of "blow" it.



I would say it was a lot of hard work since I was the one who did the work. 

My income is directly related to the effort I put into it.


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## Square Root (Jan 30, 2010)

Very well done congrats.


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## bean438 (Jul 18, 2009)

I am not knocking you. I am sure you work hard and deserve your income.

All I am saying is the more money you make, the easier it is to save and pay down a mortgage.

It isnt hard to make good choices. I know a doctor who is a kidney specialist who makes huge coin and other than a nice house, fancy cars, and dream holidays really has nothing else.

Show me someone raising a family on 50k a year who pays off a mortgage quickly and then we can talk about hard work.

Its not what you make, but what you do with it.


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## mrbizi (Dec 19, 2009)

Dana said:


> Wow! Congratulations! That is a great feat! How will you celebrate?


Time to upgrade to a more expensive house!


.....just kidding of course

Congrats!


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## bean438 (Jul 18, 2009)

Sadly this is what many people do.


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## Kim (Jan 10, 2011)

Good job! Free at last!


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## Plugging Along (Jan 3, 2011)

andrewf said:


> That only makes sense if you have a lot of extra income to make prepayments. If that's the case, I'd just reduce the amortization of the loan and go with a lender that offers 20% prepayment. The discount on prime is probably worth it.


Not necessarily. All of my mortgages are variable open. The reason is it gives you much more flexibility than just amortizing over a shorter time period.

A variable open lets you usually increase your monthly payment as much as you want. So everytime you get a raise, you can increase if you wanted. It also let's you decrease to a certain level. In the case where both my spouse and I got laid off when our second child was born, we chose to reduce our mortgage payments to the minimum for the year. When our work situation went back to sort of normal 15 months later, we start increasing our amounts. 9 months after that, we started making large lump sum payments when my spouse went back to consulting. 

For rental properties, if you want to refiance its easier with a open. 

We thought about locking in for our next renewal on one of our mortgages, and decided that because our PR will be paid off, we'll just transfer some of the amounts into their, and can do so with a variable part way through.


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## andrewf (Mar 1, 2010)

Ihatetaxes said:


> I would say it was a lot of hard work since I was the one who did the work.
> 
> My income is directly related to the effort I put into it.


Are you saying you work 10 times harder than someone in a menial job, or that a CEO works hundreds of times harder?

It stretches credulity.


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## larry81 (Nov 22, 2010)

i dont see the point of paying extra mortgage... investing this money in your classic index fund in that period would have generated 20-30% annual return ...

for me paying mortgage is like purchasing bonds  its a substitute for fixed income


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## FrugalTrader (Oct 13, 2008)

Great job! Congrats! So what's your plan with the non-reg account?


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## Addy (Mar 12, 2010)

bean438 said:


> I wouldnt say it was hard work. If you can pay down 112K in one year, they obviously have a fantastic income, which they chose to pay off a mortgage instead of "blow" it.
> 
> Nonetheless good for you.


Well, seeing as the OP said it was hard work, I took him / her at their word. I guess you know them better than I.

"Last year alone we paid off $112k off the principle amount - we worked hard to make that happen."


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## Addy (Mar 12, 2010)

reading over this thread a second time, there are way too many debbie-downers in here. The OP almost has their mortgage paid off, regardless if you agree with him/her doing this, or how they got there, it is something to be proud of, which I assume the OP (rightfully so) is.


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## Berubeland (Sep 6, 2009)

Congrats welcome to the mortgage free club!


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## Four Pillars (Apr 5, 2009)

Addy said:


> reading over this thread a second time, there are way too many *debbie-downers* in here. The OP almost has their mortgage paid off, regardless if you agree with him/her doing this, or how they got there, it is something to be proud of, which I assume the OP (rightfully so) is.


No kidding.

If you want to do a direct comparison of different mortgage paydowns, then yes - you would need to know the income/size of family etc.

In this case - he paid off a big mortgage in a short period of time - job well done.


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## Jon_Snow (May 20, 2009)

For whatever reason, my wife and I have chose to build up our savings instead of paying down our mortgage faster. Still, early in 2012 we will likely drop 90k and kill that baby. Should be mortgage free with some 200k left in savings. Best of both worlds for us.

Congrats to the OP, that is a heck of a financial acheivement.


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## the-royal-mail (Dec 11, 2009)

Jon, I 100% agree with your approach of building up your savings BEFORE paying off the mortgage. This is the safer route to protect yourself in the event adversity such as job loss strikes quickly, you need CASH, not equity at that point. Build up your savings FIRST, then pay off the mortgage. My opinion anyway.


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## LondonHomes (Dec 29, 2010)

Most impressive Congrats on your dedication to paying it off!


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## I'm Howard (Oct 13, 2010)

I cannot understand this fixation with paying off a Mortgage, it is not like the payments stop, just one particular payment.

The fact that you may be mortgage free and living in a $300,000 House as opposed to having a $100,000 mortgage on a $750,000 House proves what?

We always had a mortgage, leveraging the equity into a higher cost home, this practice allowed us to live and raise our Family in the better neighbourhoods, and spending fifteen minutes to get down town, not ninety.

We are retired and now have a very nice home that will sell for a good amount, and this portion of the Estate will pass through with no taxes.


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## Ihatetaxes (May 5, 2010)

I didn't expect so many comments, particularly those condemning the decision to pay off our mortgage! I agree that it would have been a better strategy to have invested all that money over the past couple of years given the fantastic 2 year run the markets have had but at the time I decided to work on getting rid of the mortgage the markets had taken a beating in 2008 and it was all doom and gloom with the US economy and credit crisis. I figured a guaranteed return was to dump funds against our only liability, especially while interest rates were so low and it was easy to eat up the principle.

Just to add a bit more information, we also have maxed our our RSP's every year and I closely watch our net worth which has grown by 28% between Sept 1/09 and March 1/11 (18 months). This includes an increase in investments of 41% during that period and reducing the mortgage by 90%.

Now planning on setting up automatic monthly contributions into six accounts that are all set up and ready to go. 2 RSP, 2 TFSA, 2 Non registered. Max out the RSPs/TFSAs in 12 equal amounts (total about $4,200/month) and whatever is left on a monthly cash flow basis into the non-registered. Planning on getting some professional advice for this but probably continue with an ETF couch potato RSP strategy, growth stocks in TFSA and a mix of tax efficient holdings in non-registered.

I want to semi-retire in 15 years and have around $3m in invested assets in 20 years when I fully retire plus a commercial building owned free and clear through my business and leased out.

I appreciate all the bright minds on this forum and take the criticism to heart and try to learn as I go.


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## crazyjackcsa (Aug 8, 2010)

I say congrats! It's what you wanted to do, and you did it! Were there better plans? Maybe, depending on your point of view. But paying down debt is never a bad thing. 

Zero risk, and all reward.


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## PF_Enthusiast (Jan 21, 2011)

Congrats Ihatetaxes! GREAT job!

Peace of mind to be mortgage free can outweigh the benefits of investing rather vs paying down morgage. Like most financial products and situations, they both have their pros and cons; the pros for you could have been the other guys cons and vice versa. So once again, congratulations!!!


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## Brian Weatherdon CFP (Jan 18, 2011)

A few thoughts:

1- Even if you prefer conservative approaches in life, ie. paying down debt, would you consider how investing with a dividend-&-diversified mandate over a few years or more could extend your net wealth? 

2- Yet congrats on terminating the mortgage: you're in an even stronger position if you contemplate tax-deductible borrowing for strategic low-tax investment growth. Avoiding fads, invest especially in what you understand sufficiently that you could explain it to your grandparents. (esp. dividends )

3- Some cannot pay down mortgage quickly. I'm aware of two ways -- Vancouver City S&L and Manulife's ManuOne program -- that let you speed mortgage pay-off while building investment growth. Sometimes called Smith Manoevre, it can be implemented as common-sense.

Cheers!
BW


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## Karen (Jul 24, 2010)

Ihatetaxes said:


> I didn't expect so many comments, particularly those condemning the decision to pay off our mortgage!


I can see the point people are making, but you made your decision based on market conditions at the time, and who can argue with that.

In my case, one of the happiest days of my life was the day I paid off my mortgage, and I've never regretted the decision to do that. My kids were still at home at the time, and my ex-husband was not paying his court-ordered child support, so it was a real comfort to me to know that, with no mortgage payments to make, I could support them easily with my own salary.


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## cosmica76 (Jan 31, 2011)

I say only congratulation!


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## the-royal-mail (Dec 11, 2009)

Hopefully nothing I said came across as "condemning" what you have done. I certainly offer my apology if I came across that way. Paying off the mortgage is a great idea and given the value of yours, you should definitely be proud of what you have done. I think my sidebar comments were in response to an earlier post, but while they were perhaps a bit off topic, hope they weren't perceived as a knock on what you have done. In this day and age it's terrific to read stories like this and shows that some people at least are good at managing money. As I said, in my own case I too did an aggressive paydown on a big ticket item (my car) so that I wouldn't have all those pmts leaving my account every month. I don't like fingers in my account.


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## andrewf (Mar 1, 2010)

I didn't see any condemnation here. This is a discussion forum, and it would be pretty boring if everyone held the same viewpoints on everything.


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## marina628 (Dec 14, 2010)

Have a big party and Celebrate ,in fact I will celebrate tomorrow morning when I get to San Juan on your behalf


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## GeniusBoy27 (Jun 11, 2010)

Nope -- having no mortgage is a success by every measure of the word, financially!

And have fun Marina -- nothing like a good Southern Caribbean cruise!


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## smihaila (Apr 6, 2009)

Congratulations.

But why did you decide on getting a mortgage in the first place and pay usury to the money changer/bankster? By looking at the rate at which you were able to pay it off, you could have just rent for a few years and buy the house with your own money.

That's at least the strategy that I'm following, and I'm about 30-40k short of achieving the goal. One income earner, family of 4, big savers.


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## DanFo (Apr 9, 2011)

Congrats!!!! that's quite the paydown schedule...at least without a mortgage it should be easier to be more aggresive with your investments in the future


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