If someone were to tell you today that they wanted to be free and clear of their Toronto mortgage by the time they turn 55, would you laugh outright? Or perhaps wish them the best of luck while walking away and snickering behind your hand? Sure, in today’s housing environment with high prices that are only going up, getting rid of a mortgage a full 10 years before retirement might seem a bit far-fetched. But the newest CIBC poll proves that it’s not only possible, but also shows other Canadians how to do it!
The survey, which was done for the bank by Harris-Decima shows that currently, most Canadians (on average) believe that they will be mortgage-free by the time they are 55. And while that might seem like a pipe dream to some, the survey also polled Canadians who had already paid off their mortgage; and found that those who already had were mortgage-free by the time they were 48 (on average.) That’s a full seven years before those with current mortgages hope to have them paid off. Looks like those pipe dreams might be reachable, after all.
So how did those who are mortgage-free already do it?
A variety of ways. 52% said that they made large lump sum payments every year, during the years that they could. Another 42% said that they paid more every month on their mortgage payments, and 40% increased the frequency with which they made their mortgage payments. Colette Delaney, Executive Vice President of Mortgage, Lending, and Insurance Products at CIBC says though, that breaking the chains of a mortgage didn’t come without some personal sacrifice. In fact, 78% of respondents said that they had to give up something in order to pay off their mortgage faster. “A key finding in this poll,” she says, “is that Canadians who have successfully paid off their mortgage made some difficult choices about how to best spend their money over the course of their mortgage. They made debt repayment their number one financial priority, skipping vacations or holding off on unnecessary purchases along the way to ensure they were on the path to achieving their long-term goal of becoming mortgage-free.”
Over half of those polled – 53% in fact – said that they held off on large luxury purchases so that they wouldn’t have to take out a 2nd mortgage and go further into debt; and another 53% said that they created a budget to track their spending. 49% tried to cut back on extravagant expenses such as going out to dinner and other entertainment, while 38% skipped vacations.
So what’s the lesson here? Seems to be a simple one, really. Save your money when and where you can, use that extra cash to pay off your mortgage, and maybe you too, can be mortgage-free by the time you’re 48!
