It always makes me so happy to get a post idea from a reader, so a huge thank you to Maura!
(Her request stemmed from my 2025 Financial Review/Money Pie.)
Thank you for posting. As many others said, it’s such an inspiration and encouragement to see others living as good stewards of what they’ve been given! Cheers to you! Would you consider a post all about the decision (and hard work) to pay off your mortgage?! My husband and I are a stage- ish behind you with a 3 y/o and 10 month old…. And zeroing in on maybe 3 more years until we have it paid off! My goal is before my 40th birthday, which we should hit successfully!
Congrats, Maura! Being so close to the end of your mortgage is a huge accomplishment. Woot, woot!
Before I jump in, I want to acknowledge that I always feel self-conscious about mentioning the fact we have paid off our mortgage. It’s a huge blessing to have reached this stage of home ownership and I don’t want to trivialize the fact that this is our reality. It is not a small, easy thing and I realize many people would love to be in a similar position but it is simply not tenable.
We did pay off our mortgage, but we are also tremendously fortunate to live in an area with a (relatively) low cost of living and John works in an industry that is very well-compensated.
Some bullet points for context:
- We bought our home in October 2017 and we finished paying off our mortgage in September 2024.
- This is our first home. Up until this point we lived in a 2-bedroom apartment that was subsidized (while we were getting our business off the ground, we were technically living below the government-established poverty line.)
- Because of our low incomes (we bootstrapped our business, so most of the money we were making was cycled back into the business to pay bills and employees), we did NOT pay much in taxes. For that reason, it wasn’t a time where RRSP contributions were advantageous to us as a tax deduction.
- We saved what we were able to—almost exclusively in TFSAs (like Roth IRAs)—and that is where we tucked away the money we used for a down payment.
- We were fortunate to find a home that was well below what the bank offered us as a mortgage.
- We did borrow a relatively modest sum from my parents to bulk up our down payment (and paid them back, interest-free, within a year).
- We had a 20-year amortized mortgage, but we were able to put up to 10% of our original down payment against the principal each year without penalty and we were able to double our original monthly mortgage payment. We didn’t usually max out either, but we did take advantage of these non-penalized opportunities to pay it down more quickly.
- We chose a fixed rate and had a 3.09% interest rate. This was a bit tough to swallow when interest rates plummeted and a friend told me they were paying 1.8%… but then interest rates went up and, in the end, I have zero regrets about not having to think about our interest rate.
I think the biggest key to our ability to pay down our mortgage quickly was buying a house that was under what we could afford. We bought a home that needed upgrades in a well-established older neighbourhood. We did not max out the mortgage offered to us by the bank and we had a sizeable down payment.
Timing was also crucial as we bought before the giant spike in prices around COVID. Our home jumped significantly in value during the pandemic. It would have been a great time to sell… if it didn’t require buying a house of which there was basically no supply.
Our accountant was not encouraging of our decision to pay down a (relatively) low-interest mortgage. The mainstream thought process is you can earn more on investment interest than you’re saving by paying off a mortgage. This logic sounds good on paper, but we both really liked the idea of being debt-free (also recognizing a mortgage is not treated like most forms of debt, but it is still money that is owed!).
We also saw this as a form of investment as it was a known entity we were saving (3.09% interest and, when we went to renegotiate 5 years later, this jumped to over 5%). This is DEFINITELY not me offering financial advice. We were fortunate to have a relatively small mortgage on a relatively understated home and make an income that supported aggressively paying it down.
I don’t feel like there is much secret sauce to share, but that’s a bit more information and some reasoning.
A note that we paid for all our renovations out of pocket and did not use loans of any sort. This included some very un-fun things (like replacing all the drainage tile around the house), but it also included long-term investments like replacing original (1970s) windows, adding insulation, and refinishing the exterior with metal siding.
There are options for rolling major renovations into a mortgage, but we didn’t pursue that route. If we didn’t have enough cash to cover the work, we just didn’t do it. We also extended the work out over 6+ years, and there is still plenty of work to be done (as blog visitors can attest, our basement laundry room and bathroom HAS NOT BEEN TOUCHED).
This space could use a SOLID makeover but I have been dragging my feet. The money! The hassle!
Most of the interior renovations have been minor and inexpensive: namely paint and thrifted (or IKEA) furniture. (Here’s a more extensive post with before/after shots of our renovation.)
Living room:
Belle’s room (here’s a breakdown of what we spent and what was thrifted in her bedroom makeover):
Entryway:
Shed:
Basement:
Exterior:
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Loved this!! Thank you for sharing!
Thanks for giving me a post idea!
Your reasoning for paying your mortgage off sounds like ours. We didn’t pay ours off so quickly, but we always paid extra towards the principal each money and refinanced for lower rates and shorter length to reduce the required monthly payment. There was no penalty for extra payments or paying off early. We did put 20% down so there was no extra cost of mortgage insurance.
My husband has put so much sweat equity into the house- we’ve only hired professional for massive jobs like replacing the plumbing stack or doing the roof. He hired a firm to demo the old garage and pour the foundation for the new one, but the design and building of the new one was all him ( and kids).
There are still things I’d love to renovate ( basement, some windows) but nothing critical.
I am so impressed at the level of work your family has been able to do on your house. We are pretty much hopeless when it comes to any and all home repairs and have to hire things out. It is not our “gifting” that’s for sure.
Wow, what a change to your house! It was a lot of work, but really worth it.
Well done on paying off your mortgage, Elisabeth! We followed a slightly different strategy and kept the mortgage for tax reasons (it’s all deductible in Switzerland) but I can totally see why you would want to pay off a mortgage and have no more strings attached to a bank.
So many benefits – mental freedom, reduced fixed costs and the sheer lightness of being debt-free!
A mortgage is tax deductible in Switzerland. That’s so interesting. I learn something new every day!
Love this! And I love all the before and after pics of the house.
When my husband and I got married, we lived in a house he had owned for YEARS (a lot of that time he was renting it out). After about a year of us living there, we made the last mortgage payment. We lived there for about another year, and really debated staying, but when we had my son we knew the house would be too small. We always had the hope of paying off this mortgage early, but it just didn’t work out. We’ll probably finish paying on it right around the time we’re ready to move again.
If we moved now we would definitely have a mortgage. Housing prices have gone WAY up and while our house is worth a lot more than it was when we bought it, there is very limited supply where we live.
It sounds like a good call to move somewhere that offered more space when you had your first child! Kids take a lot of space!
I have thoughts! I paid off the mortgage on my single gal house. My thought process was that it was something that I *could* do, so I did it. I will tell you this much, there is no better way to sleep through the night than to know that your house is fully yours. I made the last payment in the spring of 2008, and we all know what happened in the fall of 2008. I felt very smug knowing that I “sold high” on the portion that I paid out of investments. I sold my house in 2017 and piled the money back into the market, and sat back and watched my investment balance skyrocket. Basically paying off the mortgage and then reinvesting afterwards turned out to be an once in a lifetime case of excellent market timing.
In my current life, it’s a different story. We *could* pay off the mortgage, but it’s stupid cheap relative to our income, and I can see where it’s better to let our money grow.
TL;DR there is no one size fits all answer to this. I listen to a lot of personal finance podcasts, and for years all the chatter was about keeping your mortgage for as long as possible, but in the past year I’m starting to hear more about “well, if you pay it off you have better cash flow afterwards”. It’s all a matter of timing, and personal finance is very personal.
It’s true that there is a certain amount of privilege in being able to pay off the mortgage, but there is also a ton of hard work behind it, so you and John should be very proud – about many things, including paying off the mortgage. Bravo!
I loved everything about this comment Birchie! And yes to there being no one right answer. And, also, the “optimal” answer can definitely change based on markets, timing, and life circumstances.
Ugh, my stupid browser refreshed right when I was finishing up my comment. Blerg.
I had a coworker who used to make double payments every month, and I was confused as to how he could afford to do so. But he had bought years before we did, so his house was quite a bit less than ours, plus his wife made really good money, while my husband was in grad school. When he told me what his payments were, his double payments were less than our regular payment. Anyway, people told him he needed the tax write off and he should invest the money, but he didn’t listen and kept paying it down. Just a few months after making the final payment, he was laid off. He was so glad to not have that mortgage hanging over him, though of course they could have still made at least a single payment on his wife’s salary.
I understand the thought process behind investing instead, especially when interest rates are low (ours was 8% when we bought, which seems high now but was standard then) but the peace of mind of not having that payment hanging over you is priceless, I think. We have had too many bouts of unemployment or underemployment, and we live in a very expensive area, so have not been able to do this ourselves. But I heartily applaud everyone who has done it!
Argh. Sorry, J. Technology can be the literal worst sometimes 🙁
I know that Lisa and Phil paid off their mortgage and part of the thinking was because they work in a volatile industry they liked the peace of mind of knowing the mortgage was done!
I also really liked Birchie’s stance on how it is not a one-size-fits all.
8% sounds SO high… but my dad remembers when he was my age and mortgage rates were 18%. YIKES! Then again, housing prices were a lot lower than they are now!
I hate debt and love the financial freedom of not having a mortgage now. I did it by making weekly payments until it got under $10,000 owed and then paid for it out of our savings. It took us 15 years so not super fast, but half the amount of time it was supposed to. I have a car payment because the interest rate is 1.9% and I am making more than that in my savings account, but I want to pay it off next year so we can truly be debt free. I think if you’re able to still save for retirement and invest while paying off a mortgage faster, then you’re firing on all cylinders. If it’s paid off when you’re relatively young, then aggressively save/invest then you’re all good.
Yes, it feels good to be at a point where we can more “aggressively” save for retirement!!
My husband and I have been considering paying off our mortgage despite all the financial advice to keep the loan. It is so nice to hear another voice. We feel there is security in knowing the payments are over; but in contrast the interest rate is ridiculously low. It is a topic we continue to discuss. Thank you for sharing your journey on this. Great blog topic!
I think there have been periods of time where the advantages switch; right now, I feel like with interest rates so low it isn’t nearly the burden for previous generations (see Bijoux’s comment about 11%). As Birchie said there is no one “right” answer. I have zero regrets in how things worked out for us, but also realize if/when we buy another house, we might pursue a different path!
All the best with your decision 🙂
Good for you guys for paying it off so quickly! We had a 20 year mortgage on our first home and I think it took us 18 years to pay it off. However, our interest rate was a whopping 11% back then! People forget that our generation dealt with that. Five years after that, we were able to buy our current home with cash. You’ve made some really good home improvements, especially the outside entrance.
11%. Yikes! My dad mentions there being a time the going rate was 18%. I can’t even imagine. Though with the length of time people are amortizing now (and with mortgage insurance in the mix for many people), the amount they end up paying for a house can be double the original listed price. Ouch. Home ownership is a blessing but can be a real ball and chain for many people.
We’re happy with the updates we’ve made; so many more that could be done, but I don’t think either of us have the energy or patience to do much more to this property!
We could afford to pay off our mortgage and car loan, but we have such low interest rates that it doesn’t make sense for us to do so. I was reallllly reluctant to have the car payment, though. I hate having debt and when I get worked up over it, I console myself with the fact that we technically *could* be debt free.
We definitely need to spend time and money on some bathroom renos, though. It’s getting to be dire!
Maybe you can send your bathroom contractors our way once you’re done. Our main bathroom currently has a non-functioning tub/shower and our basement bathroom looks like something from The Shining.
That’s amazing you could pay it off and it’s great to optimize decisions based on interest rates.
As you know, we paid off our mortgage as well. We also bought well below what we could afford. It feels so good to be debt free so I feel lucky that it was something we could do without sacrificing saving. Phil didn’t buy a house until he was 33 and he has super low rent for 11 years so was able to save up quite a bit. And then his first house appreciated so much in value so that gave us extra money to pay off the mortgage on our new home (we bought a new house before we sold our last one and then paid off the mortgage within about 2-3 months if I recall). We actually had a bit higher interest rate on that 2nd home purchase but it included something like $10k in lender paid closing costs. There was no prepayment penalty to pay it off early so it was a no brained to accept a slightly higher rate.
Mortgage interest is also tax deductible in the US but it’s always at risk of being changed. And there are other changes to standard deductions and such so it wasn’t a compelling enough benefit to keep a mortgage.
You were a real inspiration to me in terms of feeling confident in this decision!
Love the home improvements you’ve made. Congrats on the payoff!
Thanks, Jean. Slow and steady “wins the race” I suppose 🙂
Paying off a mortgage is a huge accomplishment! We were getting close to paying ours off at our first house (about 40k left), but we ended up deciding to move to a slightly bigger house with more land. So, the clock reset and now we won’t have it paid off for a while. We do have a low interest rate but it still amazes (and disgusts) me how much of our payment goes towards interest!!
Hopefully our income will increase over the next few years to have more extra to put towards it!
Isn’t it funny how much I love interest in terms of saving and hate it in terms of paying 🙂
Thank you for sharing this. I think there is a lot of “misinformation” going around about what one should do in regards to a mortgage. If you can afford it AND put money into investments and savings, then I definitely think it’s a fantastic, peace-of-mind thing to do.
It is true that a house is just a house. It doesn’t matter how much it’s worth or how much it appreciates, if you’re not planning to sell it. So, having any associated debt paid off is a big chunk of worry of your shoulders but yes, like Birchie said, it’s not a one size fits all and most people probably can’t afford paying their mortgage off early (esp. in high COLAs).
Having limited debt in your life is such a great feeling!
We generally don’t purchase anything unless we can pay for it up front; I know that isn’t attainable for most people. We both come from humble beginnings, and my family was always in debt (with little to show for it). I could not fathom that.
You and John have put so much good energy into your home; I love seeing the older photos of it and, of course, seeing it today. It’s just lovely and I’ll never tire of seeing your blue shed in the snow! That should be a book cover.
There is something magical about the dark siding/shed with snow!!!
I love not having a mortgage. We take the stance that if you invest instead of paying down the mortgage, you need an investment that has a guaranteed return equal to the interest rate plus the tax you’ll lose on the income received (at least 34% including medicare levy, but more likely 39%). Since Australian variable mortgage interest rates were generally in the 6-8% rate, with the lowest at 4.5%, that is often a tough ask. The other factor is the added security of not having a mortgage when your income is coming from your own business which can be variable.
EXACTLY! Yes, I knew exactly the rate of return I was getting on my “investment” of paying it down.
Good point too, that owning our business does shift our perspective on job security, etc.