How I Owned A Mortgage Free House By Age 40

Hi everyone, I’m a 38-year-old CBB reader and own a mortgage-free house which was only possible because of my lifestyle changes.

Today, I will walk you through the process I endured and the changes I wished I could return and make.

Estimated reading time: 13 minutes

Mortgage free before 40
How I Successfully Owned A Mortgage Free House By Age 40

Owning A Mortgage-Free House Is Possible

I don’t choose to share that I own a mortgage-free house with many people, but I wanted to share my mortgage success story with all of you.

Many people with a mortgage tend to think that they will never pay it off early or will cost them double the amount of the original price.

Well, the reality is that it is not far from the truth, so being mortgage-free fast should be a goal for all homeowners.

When someone discovers you own a mortgage-free house, the common assumption is that you’re made of money or won the lottery.

Well, that’s not the case, at least for my situation, which I hope will motivate others and perhaps inspire you.

Create A Mortgage Free House Plan Before You Buy

My decision to own a mortgage-free house as early as possible came long before I started looking to buy a home.

Through my job, I work with many people with financial issues; usually, it is no fault of their own.

They either lost their job and couldn’t find one, or they had a change in health that left them unable to work.

Being the control freak I am, I wouldn’t say I like the idea of not knowing the future, especially regarding my finances.

So, what control I can have, I make sure to do so and put plenty of effort into the process.

Before starting the home-buying process, I consulted a few people who had owned a home for a long time and other first-time home buyers like myself.

I wanted to know if there were options to help me save money or things people wished they knew before buying a home.

The first thing I heard was to pay off your house as fast as possible and be prepared for any home renovation, from small to large.

Armed with this information, I decided to set some rules regarding house hunting and goal-setting to own a mortgage-free house.

Personal Mortgage Money Rules

  • Being debt-free before I turned 40 had to be achievable.
  • I needed the ability to make the monthly payments even if I lost my job and could only find a job at minimum wage.
  • I wanted to have more than twice the required down payment.
  • Monthly payments had to allow me to put money aside both for short-term savings (travel, renovations, etc.) and retirement.
  • I took out a mortgage that fit my budget, not the max amount the bank told me I was eligible.

Related: What happens if I have a late mortgage payment?

It probably sounds like I make lots of money (or maybe have unrealistic expectations of how far money can go.

Neither is the case.

Related: How to live like you are Paying Off a mortgage before you buy a House

Saving For My Downpayment

When I started saving for a house, I made $15 an hour, 37.5 hours a week, with no chance of overtime.

I was also paying off a family loan for a car.

It wasn’t easy.

Vacations, eating out, and buying clothing (new or used) was out.

No concerts or movies and no cable.

I didn’t even have Netflix and budgeted every cent I made.

Regarding money management, I was strict for two years before I started to seriously think about what I needed in a house.

Needs vs. Wants

  • I didn’t plan to have kids, so I wanted a house with no more than two extra bedrooms – I could rent them out to students if I got desperate for income.

Related: How we earned extra income renting rooms out to international students

  • The house needed to be outside of town for privacy – living in town with neighbours within inches of my house was something I hated – plus, living out of town gave me a bit more room in my budget.
  • It could be somewhat of a fixer-upper but a realistic one. Thinking I could turn a dump into a palace is not a skill set I could have or a headache I could take on. I had to figure out what was realistic for me in terms of what I could do myself or cheaply affordable
  • The property had to be within 20 minutes drive from my work (I live in Atlantic Canada so we don’t really have traffic jams to worry about)!

Searching For A Home With My Realtor

The first house I went to see I got a big reality check from my realtor.

I realized it wasn’t like on tv, where you could knock huge amounts of money off the cost of a home.

Houses were pretty realistically priced for their area and the ones that were well sold within days.

Working with my realtor allowed me to set a realistic amount of $115-125K, the max I would pay, even though the bank was willing to lend me more.

It was an up-and-down journey looking at homes and figuring it out, especially since my goal was to own a mortgage-free house.

One plus was that I got a raise to $18.50 an hour as I started the home-buying journey.

It took about six months of slowly looking at houses with my realtor before finding the right one.

I would get super excited and see a bunch, then super disappointed and give up for a few months.

During the process, I looked at 15 houses and put in bids on 2 that I didn’t get.

Maybe that’s a realistic number of houses, but it felt disappointing.

I kept waiting to walk into a house and fall in love when I knew it was the one for me.

Finally, I gave up on that concept, and low and behold, the next house I saw, I fell in love with.

My First Home

The house is 1100 square feet, 3 bedrooms, 1.5 baths, and a 5-minute drive from the ocean.

It sits on 2 acres and has neighbours within view, but far enough away that I can have privacy.

It’s not perfect; the home inspector stated that there was an issue with one spot on the roof; there is a dip in one spot of the foundation that needed to be jacked up.

The hot water tank was on its last leg, and the shed would need to be replaced soon.

Lastly, the kitchen is so small, but it was exactly what I dreamed of. Better yet, it was affordable.

The house was listed at $75,000, and I offered $77,500 because I knew one offer was already made that day.

My realtor told me not to overbid, but I felt it was a small price for the house I wanted.

Plus, when I got the home inspection done, it gave me wiggle room to offer lower due to the things I would have to fix.

I got the house for $76,000 – well under the budget I set for myself!

Choosing The Right Mortgage

I don’t have all the specific information about interest rates, but I remember the bank trying to get me not to put my extra money down.

They wanted me to keep it in case I had to renovate, and they wanted me to make smaller payments once a month over 25 years.

Your payments will be so small you can buy a boat if you want!

Related: Types of Mortgages Available in Canada

They ran many scenarios for me based on how much I put down, although I’m not good at math, which overwhelmed me.

  • Different styles of interest rates
  • Biweekly vs. monthly, etc.

Because of my inability to effectively do the math, I can’t tell you how much that would have cost me in interest, but it would have been a terrible idea.

I decided to make biweekly payments at a higher rate than they wanted me to.

The mortgage plan I chose allowed me to make extra payments yearly ($8250), and set it up as a 15-year mortgage (knowing it would be paid off way before then).

My Mortgage Payments

What did my mortgage payments look like:

  • The total price of the house is $76.000
  • My extra payment of $19,600
  • Early inheritance at the insistence of grandparents  $1,500
  • Bank loan total of $54,900

(I also got a gift for my mom – she paid the gas and food costs for friends and family helping me to move).

Putting down that extra money each year was painful but worth it.

Looking at $8250 I could be doing something fun with, and knowing I was restricting myself more than I had to come up with this lump sum sucked!

But, I always tried to remember my reasoning behind doing this, owning a mortgage-free house and that soon I wouldn’t have to continue to be so frugal.

Increasing Mortgage Payments

After three years, I went into the bank to get a new interest rate and up my mortgage payments.

Again they tried to talk me out of it, but I had gotten a raise to $22.50 an hour. 

At that point, I put the extra money from my raise towards owning a mortgage-free house.

I also did get less strict about how I spend my money.

My vacation time was budgeted for once a year so I had something to look forward to.

This way, it wouldn’t hurt so much when I handed over that $8250!

Owning A Mortgage-Free House

Last month I realized I only had $4246 left for a mortgage-free house.

Like a bullet, I wanted it over and done with instead of waiting until October, when my average lump sum payment month.

I decided why should I wait and paid it off, and now I am the proud owner of a mortgage-free house.

This is a massive accomplishment for me. I feel like a huge weight has been lifted from my shoulders.

Technically, the bank still owns my house because I have to pay a $350 discharge fee but they gave me options I’m still considering.

Options After A Mortgage-Free House

  • I will not pay the discharge fee and will have $60K in equity available if needed.
  • Pay the discharge fee and then have to apply for loans in the future if I need them.

I’m leaning more toward paying it and applying for a loan in the future if needed, but I will give myself some time to think about this.

Putting down extra money on my mortgage loan to own a mortgage-free house was the best thing I could have done.

I’m 38 years old and am the owner of a mortgage-free house. I can say that a million times over, I’m that happy.

By the time I’m 40, I will also have paid off a new car that I bought a few years ago (a huge mistake I will never buy new again!!!).

I’m terrible at math, but if I did the calculations right, I saved myself about $21,000 in interest (which was like ‘buy a house, get a car for free in my mind).

Saving Money Is A Must

Make rules and budgets for yourself and stick with them; if you can’t stick with them, be accountable.

Write down the real amounts you spent and track those things -see what things work for you and what you need to change.

Coupon Savings

I became an avid couponer. I’d get coupons in stores, sign up for coupon sites online, and join coupon trains and local coupon swaps.

I’ve also signed up for couponing apps that either provide coupons or give you money back when you take a pic of your receipt.

One year I recorded it, and I saved $1200 from coupons!

Meal Planning

Cut out fast food as much as possible, and make meal plans if they work for you.

Meal plans never work for me, but I know what a typical everyday cost is for my favorite groceries, so I know when something is on sale, and I stock up.

Split larger grocery orders with other people.

My friends and I would buy bulk grocery orders and split them three ways.

Save More With Rewards Apps

Learn about reward card apps and use them to your advantage.

For example, this week, Sobeys had an offer for Canadian Tire Gift Cards at 10% off.

Canadian Tire offered a deal when you spent $150, you’d get a promo gift card for $30.

I bought $400 worth of gift cards for $360 from Sobey’s.

At Canadian Tire, I bought four winter tires {broken down in two purchases}, so in the end, I saved $100 on my tires)

Someone explained to me recently how to get a tonne of Air Miles without changing my spending.

I earned $1200 in Air Miles last year, and I don’t spend money on things I don’t need to (and don’t let that become a pitfall for you.

Government Cash Back Offers

Find out about efficiency groups that can help upgrade your house. I got a load of free stuff through our program and received $200 back when I paid for my crawlspace to be insulated.

Cut yourself some slack.

Making massive changes is hard if you mess up on that and get back on track.

Ask for help! You never know what someone else’s knowledge can do for you.

5 Things I Wish I Had Done Differently With My Mortgage

Getting a mortgage is stressful whether you are a first-time home buyer or seasoned.

Below are some things I wished I had done differently when searching for a mortgage.

Exploring Other Financial Institutions

My first mistake was going to a bank for a mortgage.

Had I gone to someone independent to discover all the options, I would have realized the differences.

I felt the bank was pushing its agenda, selling a mortgage and the ability to make a sale.

Not Getting Financial Advice

My second mistake was not sitting down with a financial advisor who could talk to me at my level and wasn’t just in it for a commission.

Maybe I would have been better off being a bit slower in my payments and putting more aside in a retirement fund.

I’m happy with my decision, but maybe it wasn’t the best one I could have made.

I trusted my gut because that’s all I had to go on.

Interview Realtors

Not mentioned above was the horror show I had with my first realtor, who lied to me about many things about a house I wanted to buy.

I later found out she was under investigation for lying to clients.

Everything about my interactions with her felt wrong, but I wanted a house so bad I ignored it.

Thankfully I figured it out and ended up with a fantastic realtor after that!

Research Contractors

Do more research on companies that do home renovations.

I thought some home renovations would be easy.

Finding someone who wants to work on existing houses is a nightmare here.

Contractors want new builds, and when I do see people, half the time, they don’t show up to start the job.

Lastly, I should have used a budget sheet as I took generalized notes for the first few years.

Two years later, I started using an Excel budget.

It’s hard to be accountable when you don’t know if you’re missing anything.

Future Dealings

My goal for the future is to continue to put aside the same amount of money as my mortgage was so that I have more short-term and long-term savings.

I think I’ll mostly put them into short-term savings.

After six months, I’ll re-evaluate what I have and put some money into the long term.

Maybe getting a loan in the future would be more accessible, and I should put it all (or most) into long-term savings – I’m open to readers’ suggestions!

I’d like everyone to know that owning a mortgage-free house is possible.

Your situation may not look like mine or someone else who has paid off their mortgage.

Look into some of the tips and tricks on websites like Canadian Budget Binder, and find what might help make your financial journey smoother!

Related: How we became mortgage-free in 5 years

Discussion: What lifestyle changes have you made to help speed up the process of owning a mortgage-free house?

The post is By a CBB fan who wishes to remain anonymous.

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  1. The lifestyle change I would make is to move to Atlantic Canada where home ownership may still be in reach for a young person. I shared this article with my 23 year old son and he just laughed at the idea of buying a house for under $80K. When we bought our first house 25 years ago, we paid 2 x our combined gross income. To buy our house today we would be paying 6-8 x family gross income. And we have a 40 minute commute to work – each way. Incomes have not increased at nearly the same rate as house prices. In that same time period we have not even doubled our combined gross income. So I tell my kids that they need to get away from the GTA to start their lives. We are staying because 1) one of us doesn’t have much career flexibility and 2) we want to stay near to our parents as they become less able to handle things on their own. But if you’re young, there’s still time to escape.

  2. I excitedly paid off my mortgage when I received an insurance settlement. THEN, I saw a (fee-only, so independent, not selling or earning from my choices) certified financial planner, who had a whole different viewpoint, mostly related to various tax breaks for mortgage-payers. I could have invested some of the money and come out ahead, but my advisor understands the secure feeling that not having any loans gives me. My point is that I should have consulted her before making decisions! Here’s her website that explains this type of planner, and I think there’s a link to finding local fee-only fiduciary financial advisors. Nest Builder Financial

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