How to pay off your mortgage off in 10 years
The average Canadian pays off their mortgage in 25 years. I’m happy to say most of our clients are well above average and pay off their mortgage in 10 years. You won’t believe how simple we make it for you to be above average as well. Click here to learn more…
In our One Property Away Webinar we dive into more details discussing investment strategies that will you pay off your mortgage in 10 years or faster:
- Would you like to spend more time with your family,
- Or do more of the things that you love without worries?
- On average, our clients are paying their mortgages off in 10 years.
- Or half the amount of time that they were originally on schedule for.
How To Pay Off Your Mortgage 10 Years Early
Now that you have bought your home, the story does not stop there, you don’t just go on to live happily ever after – before, the entire time you were planning and obsessing and agonizing about your down payment, how much you can qualify for, your budget – now you have other questions or concerns that keep you up at night.
One of those questions is – “how do I pay my mortgage off sooner?”. The answer that most people are accustomed to is, make extra payments. The reality is that most of us are not in a position to make extra payments.
We are juggling car payments, insurance costs have gone up, so has hockey dues for the kids, and guitar lessons. Besides, we barely qualified for the house and the payments in the first place.
So, the question really needs to be, how can I pay off my mortgage faster without it impacting my daily lifestyle and cash flow. Most people in Canada get an amortization on their mortgage between 25 and 30 years, and if we want to pay it off in 10 years, or half the time that we are on schedule for, this does not seem like a reality.
There is a solution that we provide, albeit a counter intuitive one. When our clients have a goal of paying off their home’s mortgage, we talk about buying another property.
How To Pay Off Mortgage Faster – Buy Another Property
What? Yes, in order for you to pay off your mortgage, we suggest you go into more debt. This is what our clients who have this goal have been doing for years, and it has worked out tremendously for them.
Here is how this works, when you buy a place, there are a few things that are happening.
- Number one, you are most likely not buying the entire place out in cash, you are getting a mortgage. This concept is referred to as leverage.
- Number two, you are paying your mortgage down each month with your mortgage payment.
- Number three, the value of your home has likely gone up year over year. In fact, in the lower mainland, over the last 60 years the average home has increased by more than 5% per year.
How Can I Pay My House Off In 10 Years
Now we have had some ups, and we have had some downs, it is not a straight line of increases year over year in value but if you look back 10 years, for example, houses in your neighborhood were going for about 50% less than they are today. So, if you have owned your property and it has gone up in value, you have built up equity that you might be able to pull out to use towards the down payment, and take advantage of leverage to buy another property. An investment property, that you can rent out.
You need a minimum of 20% for the down payment, and you can borrow the remaining 80%. You then collect rent from a tenant, and that rent will go towards paying down the mortgage. Let’s look at some numbers and project out 10 years from now, assuming a 5% per year increase in value, or appreciation. The price of the home is $400,000 right now, and you need $80,000, which is 20% down. Your mortgage will be $320,000. In 10 years, your mortgage will have been paid down on this property by about $130,000 or so and your balance would be just under $200,000.
During this same 10 year period, the property will have appreciated as well, and if you were to sell this property in 10 years, you would have about $277,000 in cash available. Now of course we must take into account commissions and taxes, but even so, you will most certainly clear a minimum of $200,000. Could you not simply take this $200,000 and pay off the outstanding mortgage on your primary residence?
Yes, you certainly could, and this is what many people are doing, and this how they are able to pay their mortgages off in 10 years, or in half the amount of time that they are scheduled for.
- “We could not have done this without Aleem. As first time home buyers, we approached Aleem to help secure a mortgage for our family. He was extremely patient with us and he really knows it all. He answered all our questions – and we had a lot of questions – in a timely fashion and ‘coached’ us through the entire process. We continue to work with Aleem as we aspire to build our real estate portfolio. We highly recommend working with Aleem. He is an expert and we trust him enough to refer him to family, friends and coworkers. Give him a call and see for yourself.” Jared Alonzo
- “I was hesitant to leave my bank, who had always treated me well and given me a good rate. But at a friend’s suggestion I called Aleem, who impressed me immediately with a sense of creativity and ingenuity, as he presented numerous options above and beyond what I had previously been offered. His thorough approach at looking at all the variables and possibilities has opened up new doors for me as an owner and investor, and I have full confidence that Aleem will continue to steer me in the right direction going forward. I would highly recommend his services to anyone.” Aly R.