I crushed our $320,000 mortgage in just six years

The good news? A lot of what I did can be replicated by just about anyone

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From the June 2016 issue of the magazine.

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Andrew Daniels, 37, of Winnipeg

Late last year, I experienced the thrill of a lifetime. In fact, my hands shook as I drove to the bank. I could hardly believe my wife Brenda and I were finally at the end of our five-year financial plan and I was about to make the last payment on my mortgage. As I walked out of the bank, I raised my hands in the air and yelled “Whoohoo!!!!” at the top of my lungs. Slaying the mortgage dragon felt amazing.

You see, six years ago, my wife and I moved into our custom-built dream home. I was 31 at the time, with a mortgage north of $320,000. The sheer thought of it took my breath away. Sitting on that pile of debt felt wrong, mainly because my dad had ingrained in me growing up that debt was bad and should be avoided as much as possible. Now, here I was, living with my wife in this beautiful house, and all I could think about was the number 30. We had 30 years of payments to look forward to on our loan. Worse, I realized that over those years, we’d end up paying $295,755 in interest to the bank—that’s nearly double our initial mortgage! I’d managed to get through post-secondary education with no loans, but here I was with this massive burden. It made my stomach churn. I wanted to get back to being debt-free as quickly as possible. So I grabbed a spreadsheet and starting working out the quickest possible way I could pay off the mortgage.

Here’s the good news: We didn’t need 30 years to pay off our mortgage. And while every mortgage is different, a lot of what I did can be replicated by just about anyone.

First, we cut down the amortization period. In mortgage lingo, this is simply the length of time it takes to repay the loan. For us, that meant switching to a 25-year amortized loan, which increased the amount of our regular payments, but not by much. This immediately saved us $61,000 in interest and we could have cut it to down to 20 years, but we wanted to leave a little wiggle room in our budget each month.

Next, we switched from monthly to biweekly payments. Now we were making 26 payments a year instead of 12—which works out to an extra month’s worth of payments each year. It might not seem like a big deal, but when tackling your debt, small amounts really add up.

We also took every opportunity to pay off our mortgage faster, including match-a-payment options. Under our lender’s mortgage rules, we were allowed to double up our mortgage payments. So while our original bi-weekly mortgage payment was $1,000, we were free to add another $1,000 for a total of $2,000 on every payment. For nearly three years we paid twice the amount on our mortgage every other week. It was a great way to cut our mortgage in half because the extra payments went directly toward reducing the initial mortgage loan, thereby reducing the amount of overall interest we were required to pay.

Some other options we took advantage of: Every year we increased our regular mortgage payments by 15%, which sped things up. And we made annual lump-sum payments. The amounts were based on the original mortgage total. We paid 15%, or $48,000 each year. That’s a lot of money. But if you’re able to find the funds, it can make a massive dent in your mortgage.

In the beginning, I’ll admit the task seemed daunting, but as time went by it got much easier. I really think the key to becoming mortgage-free is to just get started. Ultimately, I attribute our success to the fact that my wife and I made paying off our home our No. 1 priority. For those six years, we didn’t contribute to RRSPs, TFSAs or any other savings accounts. But we’ll have lots of time to catch up now.

As told to Julie Cazzin by Andrew Daniels, 37, of Winnipeg

16 comments on “I crushed our $320,000 mortgage in just six years

  1. I hate stories like this. Who has $4000 a month to pay a mortgage plus another $48,000 a year to put down as a lump sum?

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    • It would have been more helpful to know the strategies employed to come up with the extra cash to put against the mortgage. I think most people are aware of the need to decrease the am, or use biweekly payments, or lump payments etc. what is more difficult to discern, is how to balance the competing demands on your pocket book to free up the cash to do those things.

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  2. “That’s a lot of money. But if you’re able to find the funds, it can make a massive dent in your mortgage.” Really? If you have an extra $74,000 – $100,000 laying around after taxes every year you could be mortgage free like us too in 6.5 years. This dude and his wife must have some killer employment far outearning the average of $45,760 in Manitoba or some very generous parents at Christmas time! Thanks for the advice MoneySense but perhaps ideas that are more realistic might be more helpful.

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  3. Oh, an extra lump sum payment of $48K per year? It’s as easy at that? Why didn’t I think of that? Genius.

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  4. I wonder how much both make per year? $48000 extra money is a lot, if we don’t have to pay income tax I think I can do like that guy pay of the house in six yr.

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  5. Yes I read this ad and it is old news. And this does work for the people who have money. But in the real world most of us don’t have the money to due what they did. It does help to put what you can on, every little bit helps. but get real here most of us are living paycheck to paycheck and even that is tough. Firstly before you go patting yourself on the back, if your earning that kind of money then your living better off then most people in the world. Second that has been around for 25 years, cause I new about it when I bought my first home 25 years ago. Wonder what job he and his wife have to make that much?

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  6. The quality of articles is pretty sad. Just make a list of regular mortgage features and call it a story..jeesh

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  7. Why did it mention what the couple do for a living? or their salaries? or anything else like that? The article was too vague, if any of your readers had an extra $50k every year, I’m pretty sure they would’ve put it towards their mortgage. I mean in three years they paid $288k, are they drug dealers? did their parents help? Give us all the details or don’t give us none

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  8. We actually just started on the same path in Oct of 2015 with our retirement home. Same mortgage, same gaol of six yrs, with the exact same strategy. [grin]

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  9. I’m not sure I understand the point of the article. Here’s a young couple who have a LOT of cash; a WHOLE LOT MORE than the average person. While taking advantage of various clauses in the mortgage (i.e. biweekly payments, 15% overpay etc.) can help reduce the overall term of the mortgage, most people don’t have oodles of spare cash lying around to make lump sum payments. The article may have well said, the couple won the lottery and used that extra cash to pay down their mortgage. Not a helpful article at all. Just some clickbait with the headline.

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  10. Oh this was a very interesting and educational piece of work!

    I have tip for you to pay off your mortgage in 1 year. Have the full cash for the house upfront. Invest it in a low risk TFSA or something, by the end of the 1 year, pay off the mortgage and enjoy the interest on the money…

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    • LOL. This would make a nice MoneySence article, in line with what they tend to publish.

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  11. I subscribe to Money Sense magazine …. but with articles like this, i am seriously thinking of cancelling my subscription

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  12. He says ” for those six years, we did not contribute to RRSP”. Here is a couple who is earning so much that they have extra money to the extent of 96K towards the mortgage (2K *2*12+48K lump sum). And they did not pay a single penny towards RRSP to bring down their tax liability and paid all the taxes in time!!!!(RRSPs should have earned at least 4-5% against mortgage interest rate of 3-4%).

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  13. Hey thanks for that if only I’m on a benefit and parents are on the superannuation just can’t afford it have to win the lotto or sumthing like that

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  14. So they managed to find $100,000 after-tax each year? That’s what $2,000 bi-weekly plus a $48k lump-sum amounts to. Which doesn’t add up, that would only take them three years, so some part of this article makes no mathematical sense. But anyway, that’s besides the point (of the bad math). $100k after-tax pretty much means that $150k of salary went towards the mortgage each year. Which means they must’ve been earning at least $200k+ to pull this off. Pretty much anybody who earns that much and decides to kill their mortgage in six years can accomplish this.

    Reply

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