Pay Off Mortgage by 2025

Paying off a mortgage in 8-12 years instead of 25-30 will save you upwards of $45,000 in interest payments. In addition, you will be able to fast-track to financial freedom using the equity in your home as a launch-pad to investing in assets.


 A 3% mortgage of $300,000
paid off over 25 years
costs $155,332.36 in interest


This means that if you borrow $300,000 from the bank, and stick with normal mortgage re-payment, over the next 25 years, you will pay a total of $455,332.36.

If your interest rate is higher than 3%, your mortgage will cost even more.

There is a way to pay off mortgage faster and spend a lot less on interest.

Yet, most Canadians are not aware of this and will pay the full cost of $155,332.36. 

How to Pay Off Your Mortgage Fast

1. Take a line of credit.

Preferably a secure line of credit, such as Home Equity Line of Credit (HELOC).


2. Check your principal pre-payment options with your mortgage provider and find out how you can make the additional payments to pay down your principal.

Usually, pre-payments you are allowed to make without penalties are 20% of your original mortgage value per year.

In our example, $300,000 x 20% = $60,000.

This means that the lender allows us to pay up to $60,000 annually, in addition to the regular mortgage payments. So, our mortgage can be paid off in as little as 5 years.

Most lenders accept additional payments online. 


3. Plan how much extra you can afford to pay every month. Let's call this our mortgage pay-off budget.

Let's suppose it's $1,000. Meaning that every month, we have about $1,000 left after we pay all the mandatory bills and expenses.

If you don't live within your means yet and are paying a lot of interest in addition to your mortgage, consider debt consolidation first.


4. At the beginning of each quarter, take 3x your monthly pay-off budget off the line of credit and pay down your mortgage by this amount.

In our example, we will take 3 x $1,000 = $3,000 off the line of credit and make a $3,000 payment towards the principal on our mortgage.

If this is the very first quarter of our mortgage, this single payment will decrease our mortgage pay off term by 4 months, from 25 years to 24 years and 8 month, and save us $301.73 of interest.


5.Redirect your incoming paycheck (or income from your assets) to be deposited directly into your line of credit account.

Putting your paycheck/income into your line of credit will ensure that any left-over dollars from each of your paychecks are immediately used to pay off the line of credit.

Your money is starting to work for you immediately as soon as it goes into your line of credit, rather than sitting in your checking account, doing nothing.

This money helps you fight the two biggest costs behind your mortgage: time and interest.


6. As soon as your line of credit has been paid back down to zero, repeat steps 4 and 5.

In our example, unless any unexpected expenses pop-up, we'd be able to pay down the mortgage principal by $12,000 a year, in four quarterly installments of $3,000.

The overall saving of this approach will be over $64,000 in decreased interest cost.

The mortgage will be fully paid off in about 12.5 years, instead of 25. 

What will it take you to pay off your mortgage by 2025? How much will you save?

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