Be mortgage free in 5 years!

Is it really possible? Is there a way you could be completely mortgage free in 5 years?

It’s definitely not impossible. But it does require some meticulous planning, sticking to your budget and making being mortgage free your #1 priority.

First thing’s first. Figure out how much extra you would need to pay every month to pay off your mortgage in 5 years (or how ever many years you set your goal to be). You will be surprised that number may not be as high as you expected.

Did you know that over the lifetime of an average mortgage you pay $1 in interest for every $1 you borrow? That means if you have a $350,000 mortgage, you will have paid $700,000 for that house including interest or more by the time you pay that mortgage off.

Utilize a bi-weekly payment option and you should be able to reduce that interest by about 15% (in the above case that’s over $50,000 in savings simply by paying your mortgage bi-weekly as opposed to monthly!

Let’s look at a scenario. Supposing you have a mortgage of $350,000 at a rate of 4% and you have a 26 years remaining on the amortization of that mortgage. Your payments are $1,764.17 per month and you have been making these payments for about 4 years.

Supposing you set a goal of 8 years to be mortgage free. You would need to pay an additional $1,793.39 per month to achieve this goal. This would be broken into weekly payments of $889.38 each to give you maximum interest deferral.

So it’s that easy! Wait wait, where is this extra money coming from? Unless you have a substantial surplus of disposable income .. coming up with that kind of money just isn’t going to be easy.

No one said it would be easy. But what is the price you are willing to pay? You would need to make some sacrifices today, but in a few years, you are mortgage free. You own your own house, control your future and that makes it worth while.

Let’s look at some ways you can achieve your goal.

#1- Budget, budget, budget! You need a budget for everything, entertainment, travel, education. You name it. Make a list, check it twice and figure out where you can shave off that budget to get the extra $ you need to make your dream come true. Remember this is only temporary so you can live the rest of your life mortgage free! Don’t forget to include an emergency fund in this budget. When emergencies happen (car breaks down, hot water tank breaks) you need to have a cash reserve. Don’t dip into your other budgets for these unexpected expenses.

#2-Get rid of what you don’t need! It may seem trivial, but what about that old iphone you have sititng in your drawer collecting dust? Old text text books…whatever it is, get on ebay, Kijiji, Craigslist..sell it! Big car payments? Sell it, it’s just a car. What would you rather do, drive a nice car for a couple of years or be mortgage free? Be creative, it’s amazing what you can do by putting your mind to it!

#3-Get a money coach even if it’s google! There is so much information on the internet on how to budget and save, but you may also find there are money coaches available in your community one-on-one or in a group setting to help educate you on money management at a reasonable cost.

#4-Find ways to earn extra income! Maybe you are good at tutoring or you love playing the guitar .. consider offering guitar lessons once or twice a week, start up a dance class if dancing is your passion, help your friends with their book-keeping! Whatever it is, find a way! It’s easier to control your expenses then your income, but even a slight change in income will make a BIG difference!

#5-Stick with it….Yes it’s not easy … in fact it might be hard but it IS possible and the end reward will be with you and your loved ones for a lifetime!

 

Alex Khalil
Mortgage Specialist
Mortgage Evolution Yaletown
C. 604-367-7880 – F. 888-377-7510
www.vanmortgage.ca

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