How we paid off our mortgage in 7 years (Part 1).
I’m spilling all the tea today! To give you some context I am happy to share more of our situation:
We bought our home in July 2014 in Auckland, NZ for $550,000
We paid it off in Sep 2021
We didn’t do any side hustles or make a large amount of money from selling a business. We used our salaried incomes to make extra repayments
We didn’t get any help from our parents with the deposit or mortgage, however we were lucky enough to get gifted some money towards some home renovations (about $15,000)
Ironically enough the biggest increase to our household income came exactly 1 month before we paid off our home!
With that out of the way in a nutshell here are 5 things that helped us pay off our mortgage early in 7 years:
Borrow less than the bank was willing to lend us.
We purchased a home that was around $150,000 less than the bank was willing to lend us. We worked out that if we were to take on such a large mortgage that we would have a nicer and larger home but not enough money to furnish it. Eating off the floor was not how we envisioned life in our first home so we settled for a much smaller and older home with the view to upgrade once our income increased. Even though we initially thought we would outgrow our place in about 5 years, we have been happily living here for 8 + years and don’t have plans to move anytime soon.
Living off one income
Our income did not allow us to do this in the beginning of our journey however we set small goals throughout the 7 years and as our incomes grew we eventually managed to live off one income (the lower one) and use our larger income to make large extra repayments each month and towards other fun goals along the way (e.g. holidays and home renovations).
Enjoy the journey
Most people assume that you have to cut costs as much as possible to you to reach a goal like this however this was not true in our case. I truly believe that ‘over there is not better than here’ and I want to enjoy my life now whilst working towards my future goals. We still spent on the things that mattered most to us - travel, eating out at nice restaurants, high quality food and clothing and spending on little day to day luxuries for the home. Things that were not as important to us took a backseat - new car/s (we managed to share one car between us for 7 years), entertainment, trips to Mitre 10 (we were spending $200-$400 on weekly trips there in the first few months after buying our house until we made a conscious effort to stop), mindless shopping and larger home purchases that would have been ‘nice to have’ but we could live without were delayed (we still don’t own a dryer!).
Breaking down our goals into monthly and yearly targets
Thinking about the amount we owed in total was quite overwhelming since it was such a large number, especially in the beginning. Breaking it down into yearly then monthly targets made it much more manageable and motivating.
Not giving into lifestyle creep
Our income more than doubled during our journey however we didn’t give into lifestyle creep. We did of course spend more on the things we loved as our income grew, however were intentional about using most of this to make extra repayments towards our mortgage rather than spending it all.
Disclaimer: A friendly reminder that as always all of my posts are not financial advice and is for entertainment and educational purposes only.
Photo by Storiès
