Paying my $315,568 mortgage off in eight years, on one income
On April 2010 I started my home ownership journey with a mortgage of $315,518. This was the most the bank would loan me on my single income. On the 16 May 2018, eight years later, I made my final mortgage payment. It was not easy to pay the mortgage off in such a short period of time. Read on, and I will tell my story of how I did it, and the little tricks I learnt along the way.
There is no magic wand to paying off any mortgage quickly. No single approach makes the difference. Success comes through consistency over time. Saving and investing money for the future and reducing my tax in the present. But most of all, not spending. One month after my final mortgage payment, I thought back to the many purchases I could have made over the eight years, but didn’t. The more expensive holidays I could have taken, but didn’t. And it has brought me to where I am today, mortgage free.
No one could prepare me for the relief of making my final payment, I nearly cried. The mortgage section of my bank account disappeared on the 17th May 2018, the day after my final payment. I was now free from my mortgage. My bank account looked bare. The money I would earn from now on was mine. I can spend it as I like, but as you will see, the spending habits that got me to where I am today will probably stay with me.
This is an account on how I did it. I have recorded YouTube videos relating to each section of this article. You can find the video links at the end of each section. Or go to the Living our lifestyle YouTube channel to see the videos there.
Why did I decide to pay my mortgage off so quickly
I am a single, professional female with no children (SINK). I had been looking for a property since 2008 and it was all very exciting. Going to open houses, and eventually going through the purchasing process to have a place of my own at the age of 38. Then on the 10th April 2010 came the reality of the first mortgage payment. I paid $2,052 for the month with interest at $1,708.13 This meant I had paid the bank $1,708.13 of my hard earned salary in interest. It felt like I had just set fire to my money. I know this isn’t the case, but it certainly felt like it. I knew how much the interest would be beforehand, but it was not until I made that first big interest payment that I knew what I had to do. Pay my mortgage off as quickly as possible. I didn’t want to be tied to my mortgage for 25 years. I simply could not do that, it was totally against the grain for me. When I first took out my mortgage I said to a work colleague that I intended to have my mortgage paid in seven years or by the time I was 45. The reply was “I really hope it happens for you”. For me there was no luck involved, I felt there was no other option. At the age of 45 and 11 months I had paid my mortgage off.
I love travel, adventure and living in different countries. I love quality and craftsmanship. While I had the mortgage it was very difficult for me to justify the expense and time for any of this. I also wanted to be able to work less and enjoy my adventures earlier in life. I have just turned 46, so age is starting to creep up on me now. Many of my great friends retired early, in their late 40’s or 50’s and I envy the life they lead. They are fit, healthy and doing what they love most. Walking, cycling and living life. They have shown me what is possible and with my mortgage paid off I will have more money and time to peruse long overdue vacations to the UK and elsewhere around the world. It is incredibly exciting that now instead of looking at pictures on the internet I can start planning. So there is my why, freedom to do what I want, when I please.
Click here to see my YouTube video where I talk about why I decided to pay my mortgage off quickly.
Saving the deposit for my house
I am a natural saver and have been for as long as I can remember. There was no parental influence involved, it is just what I do. When I received birthday money as a child, I remember putting it in the bank. I didn't start working until I was 23 when I was studying and living in South Korea for a year in 1995. I taught English while I was studying to earn money for living. I also managed to save some of my earnings and used them to backpack through France, Spain and Germany for three months. During this time I visited the European friends I had made while living in South Korea. Admittedly I am not the best at traveling alone, but it was a such a growing experience to find my way around counties with a different culture, food and language. I loved the challenge.
While I was in Paris I met two fellow male travelers separately, both in Paris and they were cycle touring parts of Europe. Little did I know this would be the beginning of decades of cycle touring for myself. It seemed sensible in every way. I would get exercise, fresh air and the freedom to go where and when I wanted. This was heaven for me. But, during this first trip through Europe I had a Europass which allowed me to travel by train. This seemed the most practical and affordable way to travel. So travel doesn't have to be expensive, it is possible if you are willing to think outside the box a little and put in a bit of effort.
After returning to Australia I move to Sydney. I worked as computer trainer, danced, walked and cycled. But eventually the gypsy blood in me called again. I decided to go to London. I spend the following seven years, working, studying nutrition, dancing, cycling and walking in the UK and Europe. I was 26 when I moved to London and 33 when I left. I don't regret a minute. I had such an amazing time. This is also where I save the majority of my home deposit for my house in Melbourne, Australia.
During my seven years working and studying in London, I was aware of wanting to buy a property somewhere at sometime. I knew that I had to find a balance between living my gypsy lifestyle and saving for later. I found it quite easy to sacrifice and save. I suppose living in London meant I had time to figure out how to live cheaply and still enjoy myself thoroughly. I cycled, danced and walked my way around some of the UK and Europe . On returning to Australia I spent my time saving once again. I have always said as long as you can get accommodation and transport costs under control the rest is easy. I am very considered in my spending, so having the goal to buying a property meant all my savings went to this. I might add that I didn't buy my property until I was 38. I saved for 15 years for the deposit.
Click here to see my YouTube video where I talk about how I saved my house deposit.
The mortgage and the bank
Consistency, perseverance and determination, these are the keys. For me that meant paying as much as I could into my mortgage. I read many articles from the internet about people paying their mortgages off in a very short period of time. The same concepts kept coming up.
Only take out a manageable mortgage
Paying fortnightly in my case – I did this as soon as I had the mortgage
Having an offset account – which I used straight away
Any extra money I received went immediately into my offset account
Asking my bank if they would lower my interest rate. The first time they said no, the second time they said yes
Paying for a wealth package with the Commonwealth Bank each year to reduce my interest rate further
My ability to pay so much off my mortgage was because of my lifestyle. I have always been a saver and aware of what I spend. But it was not until I made that final mortgage payment that it struck me exactly how much of an impact my lifestyle had made.
Click here to see my YouTube video where I talk about my mortgage with the bank.
Lifestyle and its importance
My lifestyle made the biggest impact on paying my mortgage off quickly. I have always lived well within my means, ridden bicycles and used public transport, holidayed within my budget and been a savvy shopper. The impact of this lifestyle is now evident to me. One house paid off, a health superannuation sum and a small amount in stocks. Not too bad.
Cycling, walking and camping have been the staples of my travel wherever I am in the world. I have always cycled whether it be living in Sydney, London or Australia. My bicycle has been my work horse. My bicycle is a Chas Roberts which I had custom built in the UK in the year 2000. I have a Kona mountain bike as well which I use for more off road adventures. I find cycling easy, financially sensible and just love it.
Whether it be a two week cycle trip on the Mawson Trail, a nine day remote walk on the South West Coast track, a seven day sea kayak adventure around the Whitsunday islands, or a six day Hobie trip around Lake Argyle, camping is usually in there somewhere. Camping has been part of my adventure activities for twenty years or so now. I have quality gear which lasts many years and makes my adventures comfortable. Once I was set up, it always made for a cheap holiday. Below is my Macpac microlight one person tent.
Traveling longer distances has been done mostly by public transport or paying someone petrol money. Both have proven to be significant money savers. With public transport as far as I am concerned I am chauffeur driven with air conditioning, most of the time. You will note there is no mention of a car! I did purchased a car for $5000 a few years into my mortgage. A year or so before my mortgage was to be fully paid I sold it. My partner, Kevin was no longer able to maintain it. I sold it for $500. Do I regret buying the car? No. It allowed Kevin and I to go on some amazing adventures and carried us from Katherine to Darwin, Magnetic Island and finally to Brisbane. It had done its’ job. No more car expenses, yippee. Saving me a small fortune.
Personal care has been fairly easy too. In Melbourne I paid $8 for my haircuts at a training salon every two months. Since meeting Kevin, I cut his hair and he cuts mine. Kevin paid around $150 for a good set of hair clippers and they are still going strong. So we don’t pay for haircuts. I do pay for good skin care and sun screen because I need to protect my fair skin from the elements. This is a necessity for me.
Food shopping is done by Kevin as he is able to visit the supermarket when the reduced and special items go on sale. We put in $50 each a week. In Melbourne I shopped at Queen Victoria markets once a week in the morning before work to get my vegetables, fruit and meet at half the cost of the supermarket. All by bicycle of course.
Entertainment was usually a movie, gallery opening or similar. Of course it was always cheap night at the movies. In Darwin we danced twice a week for $8 each, plus take a plate for supper. Oh, yes and the amazing pool parks in Darwin, just great. In Brisbane we have a BBQ outing once a month, $20 for two of us with the Wooden Boat Association. I recently celebrated my 46th birthday with a breakfast at Royal on the Park in Brisbane. I was lovely to be treated. I do occasionally splurge but only if I know it is value for money.
Adventure and travel has consisted of a few cycle, walking, kayaking and hobie trips in Australia and New Zealand. Visiting my parents in Hobart and managing to find jobs which have taken me to different locations in Australia. After a number of years in Melbourne I needed a change, it took me two years to find a job. I moved with different jobs from Melbourne to Katherine to Darwin and Brisbane where I currently live on a small wooden sailboat on the Brisbane River. I travel to the city each day for my job as a Technical Trainer.
Renting my home and the tax advantages
I enjoyed living in my house in Melbourne for a few years before I moved to Katherine in the Northern Territory for work. When I moved to Katherine for a job change I rented my house out in Melbourne. This had tax advantages which helped me save money, I could pay even more into my mortgage.
When I moved from Melbourne to Katherine this meant I had to rent for eleven months. Not ideal for paying a mortgage down quickly, but it had to be done. Then another job change occurred, by this time Kevin and I had met. We both moved from Katherine to Darwin. This is where Kevin and I started house sitting and we have never looked back. We joined Aussie House Sitters to test it out and continue to get house sits each year. If there was only one thing I could tell people to do to pay down their mortgage or save it would be to rent their home out and house sit. Granted it is not for everyone, but it has made the biggest difference to how much money I have saved. If it were not for this I would still have a mortgage. We have stayed in architectural properties, had a seven week holiday on Magnetic Island and met some great friends along the way. The house sit on the left is Darwin, on the right Magnetic Island.
Another significant saving is living on a 28ft wooden sailboat on the Brisbane River. Kevin purchased the boat, I pay the mooring fees of $260 a month inclusive of water a shower room and access to a shed. We joke that we have a multi million dollar view for a pittance. It is cheap, peaceful and private, what more can I ask for. We are on a swing mooring so I have to row to land each day then cycle to work. I don’t mind this at all, but when we are house sitting I enjoy the change only having to change into to cycle clothing each morning.
So there you have it, in short find ways to reduce expenses, saving and maybe investing this money. There are one or two things I look back on and think I really would have liked that. But then I wouldn’t be writing this now with my mortgage paid off. It is possible to pay a mortgage off quick and have freedom to set your next goal. Just go for it.
To get a list of my best tips to pay your mortgage off quickly, take a look at this free MS Word document.