The ultimate guide to paying off a mortgage

By Your Mortgage

Always be sure to go above minimum mortgage payments


Are you ready to pay off your mortgage in under 10 years?

Did you know that paying off your mortgage in 10 years can be setup quickly and is in fact very easy to do? It’s true! Just a quick alteration in how you pay your home loan can save you hundreds of thousands of dollars.
And that’s just the monetary benefits. By paying off your mortgage quicker you also gain better financial security, a less stressful lifestyle and a happier, richer life. Talk about a Big Win.

From start to finish it took us 6.5 years to completely pay off our mortgage

No more frugality. No more arguments about money. No more worrying about how to make mortgage payments or pay bills.

A single decision to change how you pay off your mortgage can be worth enough money to spend big on the things you love, like international travel, sending your children to private schools or even early retirement.

Your mortgage is the biggest debt you will likely have, which means by paying it off fast you can save more money than in any other decision.

And with just one change, you can make all the difference to your life…

What would you do if it was gone in 7 years?

We paid our mortgage off in 6.5 years and if I had known what I do now back then (what I’ll be sharing below for free) I reckon we could have done it in 5 years.

We don’t have $500,000 a year CEO salaries. We haven’t had inheritances, lottery winnings or any other type of windfalls. We are both white collar workers that earn a respectable salary but even on the average Australian wage (around $60,000 or so) you can do exactly as we did and pay off the same mortgage in only a few years extra, most likely about 7-10 years.

We’re not alone either, listen to some of the results others are getting…

Started at $375k in Nov 2010. Currently remaining: $67k (May 2016). Tough going, but BEST DECISION EVER! – Martin

We bought our first home ($370K) this year (in April). We’re now on track to pay it off in 11 years with a single income, 3 kids. It is so much more inspiring to aim for that than a droll 30 years. Once it is mutilated we are going to live overseas for 6 – 12 months with hopefully 5 kids in tow, then enjoy working 2 days a week. – April

We paid off our $380K home loan in 3.5 years in 2010. Lots of hard work and sacrifice but it was worth it. – Huy

We’d all love to have our home loan paid off.

But first what would you do if your mortgage was gone in 7 years?

It would transform how you see your pay cheque, how happy and secure you felt each day. It would change your life plan, the schools your children could go to or even how early you could retire.

Whether you want to travel the world ten times over or have the freedom to be a stay at home parent (and not worry about money!) paying off your mortgage is an amazing big win in life that’s available to everyone.

So why do people rarely pay off their houses in 7 years?

We now are 100% debt free. We own our house, our car, have no student debt and have never even used credit cards. Our financial standings are rock solid, our flexibility greatly increased and our happiness at an all time high with cash flowing in from everywhere like a fountain.

It’s truly made us happier and freer so why doesn’t anyone really teach us how to do this? How do you tackle such a big problem? Where does the extra money come from? It’s all so complicated and mathematical, how do you go about understand it all?

How to pay off your mortgage

Now I can’t cover every single detail in this one piece as otherwise it would go on forever but below is a very brief outline of how to do it. We used it for 6.5 years and by paying our loan off early we saved $316,562 in interest.

By the way, this isn’t a scammy, get rich quick scheme that only works for the people on top or the 0.0001% of people that “make it”. This result was achieved through specific, repeatable actions which you can do too and the results are achievable for everyone, even if you’re on a single income, even if you’ve got children. Heck, even if you are BOTH those things there are Winners out there using this knowledge and getting ahead.

1. Sit down and create a very simple plan

With the proper strategy, you can be free of your mortgage debt within a far shorter time frame than the “normal” 30 year period. Below are some suggested time frames for what you should aim for depending on your income and assuming a roughly $300,000 loan amount at 5% interest. I should note that the below are very rough estimates at what people with no extra debt or extenuating circumstances can accomplish. If you have huge medical bills or $50,000 in credit card debt things will look very different. For everyone else:

Single Income Of: Loan Term: Fortnightly Payment:
< $70,000 15+ Years $1,100
= $70,000 11-13 Years $1,300
> $95,000 6-7 Years $2,000


Couples Income Of: Loan Term: Fortnightly Payment:
< $140,000 7+ Years $2,000
= $140,000 5-6 Years $2,600
> $180,000 3-4 Years $4,100

Now obviously this is just a starting point but it gives you an idea of the types of time frames that are legitimately possible when you focus on paying down your debt. This will help you set a realistic goal based on what you earn as a single mother will have far less income than DINKS do.

Once you know your time frame you can easily calculate the required repayment amount using an online repayments calculator or just start with the suggestions above. When you know how much is required each fortnight, then you can get to work on hitting that target.

As an example, imagine John and Jane who both have a pretty standard income and the same $300,000 mortgage. Together they earn $100,000 before tax each year. A plan they put together might look something like this:

Income after tax: $84,406 or $3,246 per fortnight
Repayments needed to pay off loan in 7 years: $1,955 per fortnight
Therefore they will aim to live on $1,291 per fortnight ($3,246 – $1,955)

Now $1,291 a fortnight is about $33,500 a year which is a very realistic amount for a couple to live on. If that amount isn’t enough to cover all their expenses then they might even choose to take longer to pay it off.
7 Years = Allows $33,500/year on expenses
8 Years = Allows $38,500/year on expenses
9 Years = Allows $43,000/year on expenses
10 Years = Allows $46,000/year on expenses

Whichever way they choose, they know their mortgage will be gone in 7-10 years all while they enjoy a good life without sacrifices. If you’re on a higher income then things only get better too!

To setup this plan isn’t hard. It doesn’t take special mathematical abilities, all you need is to know how much you earn, how much your mortgage is and a mortgage repayment calculator which you can find here. Too often people think they need a perfect, 1000 step plan before they can start something but it’s really very simple and only takes about 10-15 minutes. And once you have your plan, you can get to work on the next step.

2. Set your repayments higher and make them automatic.

This is the meat and bones. You can scheme, wrangle and fiddle around with a million things for years and years but without throwing large percentages of your income at your mortgage consistently… it’s going to do virtually nothing to your loan. I’m not going to lecture you on not buying lattes or your favorite take out but money needs to be allocated to your mortgage.

The single biggest thing I learnt is to ignore virtually all the “experts” tips and instead focus all your effort on finding ALL available extra money and pushing that to the mortgage. I’m not talking about that once off $2,000 bonus or tax return or whatever, I’m talking about looking at your income and setting up an automatic, reoccurring payment to your mortgage that is made up of a sizable chunk. Think of figures like what’s mentioned above: $1,000, $2,000, $4,000 every fortnight. How you get that extra money is something I cover in detail at Mutilate The Mortgage (there are also many other great sites) but for now I’d just like to focus on the overall strategy.

To throw this serious cash at it regularly use “recurring payments” which is a feature you can setup in your online banking account. For example John might get paid every month on the 15th. He would then set it up so that on the 16th 50% of his pay is automatically transferred to his mortgage or offset account as an extra mortgage repayment. At some point his normal mortgage repayment will be taken out too but this way he is adding more to his mortgage and still has control to increase/decrease the automatic extra repayment if needed.

Whilst it can look different for different countries and banks, below is an example of how you would do it using the bank ING. First Login, then click on the “Transfer & pay” menu on the left, then choose “Transfer Funds”.

Click to enlarge image

By setting it up this way you achieve your goals at the same time as it all being automatic, hassle free and as painless as possible. After a while you don’t even notice it and you can just keep enjoying your life while you systematically cut your mortgage down.

3. Stay motivated

Whilst it sounds like something you may shrug off, it is in fact very critical. Even if you’re destroying your mortgage and only needing 5 years to pay it off… that’s still 5 years you need to keep up your motivation because without it there’s sure to be something else to tempt your money away. You can know all the tips and tricks but if there is no motivation, no reason for you to do something you will simply do nothing and not care.

Find out why you want to pay off your mortgage faster and put that reason in a very visible spot so you never forget it. Then keep reminding yourself of that reason every few months by imagining what that future will look like. Maybe use that reason as your “transaction description” so you see it each time the money is automatically transferred. Want to be mortgage free before you have children? Are you just sick and tired of being in debt? Whatever it is make sure it’s clear and on display so you’re continuously motivated to reach your goal. We had this reason always on display in the spreadsheet we used to manage our finances and although we had our extra mortgage repayments all automatically setup it still helped a lot over the long years it took to accomplish.

4. Cutting costs and increasing efficiency

The more of this you do, the sooner you will pay off your mortgage, it’s that simple. It also has the added benefit of often simplifying your lives and making you happier. On top of all that, it’ll mean that when you save for retirement you won’t have to save as much which means you can retire earlier.

After setting up the initial automatic payment your main focus should be on finding MORE available income by cutting costs, earning more income and increasing efficiency. When you trim or save on your bills, up the amount of your automatic payment. When you get a raise or new job paying more, up the amount of your automatic payment. I posit most people can strive or get to pushing 70% of their after tax income towards their mortgage and a number of people even go further than that. I recently heard a great quote that I think applies well here:

I do the things you won’t, so I can get the results you can’t

Don’t settle for “saving 5%” or other minuscule targets most financial experts trumpet, you CAN do better! Winners do better. Australia is one of the most expensive countries to live in on Earth with our two main capitals (Sydney and Melbourne) being 20th and 21st on the worldwide cost of living survey. Even with this high cost of living we and others regularly hit 70%+ savings rates so push the bar up and aim for something that’s more inspirational!

Today’s post comes from Alex. He blogs over at Mutilate The Mortgage and is giving away a few free gifts just for Your Mortgage readers. Head over to to find out how to pay off your mortgage in under 10 years!

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