How to pay off a mortgage in less than 3 years [spoiler - there are no shortcuts]
OUR STARTING POINT
We are two young professionals, with full time jobs and an income of $25k/yr each.
All our combined savings amounted to $120k (saved during a period of 10 years).
We bought a $160k end of terrace house in July 2015 - 3 bedrooms, 1 bathroom.
To be able to reach that sum, we loaned $40k from a bank.
Our house is now worth $275 on the market.
We paid high monthly instalment (usually $1k/mo, but sometimes $2k) and managed to repaid the bank loan in January 2018 (in 2,5 years).
In the meantime, the rest of our salary went into renovation works - to date we've spent $73k.
There is no magic formula to paying off a mortgage!
When people hear 'mortgage' they think of a huge loan of €200k to repay in 30 years. It doesn't have to be like that - if you save and buy an affordable home, you can have a small mortgage.
SO....HOW DID WE DO IT?
1. We had clear priorities and saved for years.
A lot of people like to use the word 'sacrifice' when they talk about saving to buy a house. I always shied away from that expression, because, for me, it comes with connotations of martyrdom or self aggrandisement: you are either exaggerating your suffering or you are boasting about your efforts.
I don't think buying a house requires 'sacrifice': it requires clear priorities.
You have a goal - something that you want to achieve and that will make you happy.
You make a plan on how to achieve it.
You follow that plan.
All your actions are designed to help you achieve that goal, so you prioritise how you want to spend your money. You are making a deliberate decision to delay your gratification: instead of spending your money on a trip, you will spend it on the house that you will buy in the future.
Your spending is organised and intentional - thousands of people do that, and not just to buy a house. They are not making 'sacrifices' they are go-getters.
2. We bought an affordable home.
We could have asked the bank for a $140k mortgage and bought a brand new $250k house.
We could have asked for a $200k mortgage and bought an even better and nicer house - maybe even close to the seaside!
However, for us, it was more important not having to pay a mortgage for the next 15 to 30 years.
We wanted to find a good-enough house, which we could make into a nice home, and pay off any loans as soon as possible.
I want to clarify that there is no right choice here. You may be perfectly happy to pay a mortgage for 30 years and never question your choice.
But, unless you win the lotto or start earning $120k a year, there are no shortcuts here.
If you want to quickly pay off a mortgage, you don't buy a $600k house in Malahide.
3. We did most of the renovation jobs ourselves.
I already posted about this, but it's worth repeating: if we paid professionals to do ALL the works we've done... we would have spent double the money.
Just to name a few, we designed and installed the kitchen, we levelled the floors, replaced the floor boards and installed a laminate floor, etc.
It took work, a lot of effort, time and willpower. We had excellent results... and it saved a lot of money!