Paying Down Your Mortgage Faster

A mortgage is probably the biggest debt you’ll ever have.

For the first decade of our mortgage experience, we just looked for the best interest rates, tried to have the smallest mortgage possible, and tried to make payments more often to decrease the mortgage life.

To be honest, we got our house for CHEAP!

Josh was working part-time at the local hospital, serving food to the patients with his usual flair and charm. The patients would hear him singing big band tunes as he walked through their doors with trays of food. He would come to the aid of hospital staff when codes for help would come in over the speaker system. He had the funniest/saddest stories to tell when he came home at the end of the day.  He made a good wage, but it was only part-time.

We found a house within our small budget – a real fixer-upper, but OK to live in for a while before major repairs were needed.  And it even had an apartment to rent out upstairs. We could afford this, even on a part-time income. And I could still be home with Josiah and any other kiddies that came along.

$67,000 mortgage.

And we had a tenant ready to move in when we got the keys.

We rented out the upstairs apartment for 4 years, had another son just after we’d lived in the house for 1 year, and Josh got a full-time job at a local church within a few months of moving in.

We payed down our small mortgage a little during those 4 years.  We made biweekly payments for a while, instead of monthly payments. This meant we were making 2 extra mortgage payments a year – not much, but it lowered our mortgage life by a few years.

Then we had to make a hard decision – we were living in about 700 square feet of house, with another small finished room in the basement and a big claw-foot tub to bath the boys.  We had to seal the windows with plastic wrap every winter, needed space heaters throughout the house, and had to pay crazy amounts to fuel our oil furnace every year.  The boys were sharing a small room, but they would only get older – and BIGGER.  It was challenging to have people over like we wanted to with the lack of space available. Should we move or should we stay?

We decided to stay. This meant no more rental income from the upstairs apartment, and years of renovation ahead of us. We dug in our heels and got to work.

We asked the bank for a bigger mortgage to finance the renovations. Still, our mortgage was much lower than anything else similar on the market. And we were just starting to get used to our neighbourhood. We have some amazing neighbours, BTW!  And there’s lots of kids for our boys to grow up with. It’s been great that way.

Three years of renovations just about did us in. I must admit, I wanted to move at least a few times. We had to gut the entire house (there was no insulation in the walls, hence the plastic wrap on the windows, space heaters and outrageous fuel costs!) and rebuild as we could.

First we tackled the upstairs, since we were already living downstairs quite comfortably. The demo work was really fun and we had lots of help! A dumpster sat on our driveway for a few weeks, and we filled it to the brim. Mysteriously we weren’t charged anything for the dumpster. And we had an electrician offer to help us rewire the existing knob-and-tube wiring throughout the house. The only requirement was that Josh would apprentice him during the work. DONE!  We had a friend who was a contractor and he would take any quote we got and come in 20% under that amount. DONE! And I was willing to pull endless nails, insulate the whole house, paint all the walls, and whatever else I could manage. Josh worked two jobs for a few years – one at the church and one at home. Usually we had some separation from the renovations as we lived on one floor of the house and worked on another. And we took a few breaks where there were months that we didn’t touch the house – just lived in it and enjoyed some family time as our boys just kept on growing!

Three years and one more increase in the mortgage to finish up the siding, flooring and trim throughout the house. We had two big unexpected expenses along the way – flooding in the basement made us aware of the need to reseal our foundation (about $7500), and the extremely un-level house (built in 1950) meant there were extra flooring costs. Plus we’ve since had to re-seal (once again) two parts of the foundation because of shoddy work from the company we originally hired for the foundation (I WON’T mention any names!).

There are a few odds and ends to finish on the house (they’re starting to become just part of the scenery!) and a couple of decks to put on the front and back – but all in all, it’s fantastic.  Actually a little too big for our small family, but as the boys grow I realize it’s probably good we have about 1400 square feet and lots of space for friends and sleepovers and visitors travelling through and everyone to get some peace and quiet when needed. And I love our huge front lawn, always have. I don’t even mind mowing it in the summer!

Sorry, got sidetracked, back to paying down the mortgage faster.

So, with the major home renovations done, we were looking at a mortgage of $165,000. Not bad for what we have – nothing similar even close to that on the market in town.

For a couple of years we just paid the mortgage as usual. Then we went to biweekly payments for a while again. I always found it hard to budget for those two extra payments, and it would create alot of stress for me.  Back to one monthly payment for a while.

We spent any extra money on education for a couple of years – Josh completed the Master’s degree he wanted, and I completed my Bachelor’s degree. We managed to do both with little debt and paid the debt off before the degrees were in our hands!

We had talked about increasing our mortgage payments over the years, but never actually took any steps towards that.

We crunched numbers and talked about paying off the mortgage in 10-15 years instead of 25. We like the sound of that, but it took us a couple more years to take the plunge.

Through that time we discovered all kinds of ways to pay your mortgage faster:

  • There is the biweekly payment option that would decrease your mortgage life by a few years.
  • There is the option to increase your regular payments by about 20%
  • You can make lump-sum payments every year if you can put some money aside for that.

After trying the biweekly idea twice and feeling stressed from that option, we finally decided to go with increasing our mortgage payments.

We’ve always tried our best to live on one income, and any extra money like occasional work or part-time jobs for me or income tax refunds were spent on dream-things like furthering our education or Disney World or Family Camp in the summers.

When raises come our way, we try to keep the same budget we had before the raise (as much as possible).  That makes for some room in the budget between what we have available to spend and what we actually need to run our household.  Hence, we can think about things like increasing our mortgage payments.

See, what got me was looking at the amount of interest we pay on the mortgage. I happened to notice that a couple of years ago as I was browsing through our Annual Mortgage Statement for income tax.

Honestly, I was floored. Our house will not cost us $165,000 in the long run – it will cost us more like $215,000 (or more?!).

$50,000 in interest (or more)? $50,000 on… nothing?  $50,000 that could be at least 4 vehicles, 2 boys through post-secondary education, lots of dream vacations for the family, and how many schools/orphanages/clean water filters could that provide in the developing world? Etc. etc. etc.

Uh, no. I don’t think so.

We’ll do our best to avoid that.

But we’ve already been paying a mortgage for 10 years now – ugh.

So we took the plunge, and just started making increased mortgage payments.

It’s a good start.

And you can increase the payments by even more every year, I believe.

Then we’ll start in on lump-sum payments.

But also keep in mind the next few years of raising boys into men and making sure they don’t feel deprived and also giving money to awesome causes is important to us as well.

One step at a time.



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