How To Be Mortgage Free Faster & Save Thousands

Inside: How to pay off your mortgage faster; how to save money on your mortgage; hacks to pay off your mortgage early

When I posted that we became debt free in July, I had a few people ask me if we are mortgage free too. In short, no we are not mortgage free, but we have made some changes to be mortgage free faster. First I’ll rewind to getting our mortgage, and then tell you what we’re doing now to be mortgage free faster and save so much on interest.

Getting Our Mortgage

We bought our house in September of 2015, just about a month and a half after our wedding. We did our home inspection a week before the wedding, and the night before I was faxing paperwork to our mortgage broker. I don’t recommend this timing! I am self employed so it can be a bit harder to get someone to lend you a lot of money. We had saved enough for a 5% downpayment and found a house we loved. Side note: I definitely would recommend saving more for a down payment. You can find all my advice for first time homebuyers here.

We ended up getting a mortgage for $242,113.20 amortized over 25 years. Our interest rate is 2.64%, which we locked in for 5 years. If we paid monthly for 25 years we would be mortgage free in September of 2040! I would be 50 years old before becoming mortgage free.

Changing Our Mortgage To Accelerated Bi-Weekly

The first change we made was a relatively simple one to make. In fact, if you do nothing else, I would recommend making this change because you’ll hardly notice it. We changed our mortgage frequency to accelerated bi-weekly. Meaning our mortgage payment comes out every 2 weeks, so twice a year we have 3 payments in the same month. If you get paid bi-weekly and line up your mortgage payments with payday, you’ll hardly notice the extra payment because you’ll also have an extra paycheck that month!

Just from making that small change in our payment schedule, we automatically shaved off 2 years and 8 months off our mortgage, but more importantly we saved $10,699.26 in interest! Can you imagine being debt free almost 3 years sooner plus saving over $10,000 in interest just with a simple switch to accelerated bi-weekly?!

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Changing Our Payments

In January of this year, I decided to add a little extra onto our normal payments, by rounding it up a little bit. At that time our balance was $214,524.31. If we had kept going on our accelerated bi-weekly plan we would be debt free in 19 years from then. I decided to round our payments up approximately $50 biweekly, which brought our debt free date down by 2 whole years, and will save us $6389.38 in interest.

If we continue paying $50 more biweekly we will be mortgage free in January 2036. Which is 4 years and 8 months sooner!

The Future

Many people in the personal finance world are aggressively paying off their mortgage like any other debt but I felt it was more important to be saving for retirement so the magic of compound interest could work for us.

Of course interest rates will change and it’s impossible to know what the future holds, but I’m quite certain that we will be mortgage free before September of 2040. We will be renewing our mortgage in the coming year, so I’ll be sure to update you on what happens.

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