25 Money Saving Tips to Pay Off Your Mortgage Faster

Pay your mortgage faster - Smart tips to save money

How to pay your mortgage faster

Embarking on the homeownership journey means committing to decades of mortgage payments. While the thought of servicing a loan for 25 or 30 years may seem daunting, there are savvy strategies you can employ to shorten your path to mortgage freedom.

Whether you’re a first-time homebuyer or a seasoned homeowner, mastering these tried-and-true tactics is the fastest way to pay off your mortgage. From making extra payments to strategic refinancing, each tip offers a unique opportunity to accelerate your mortgage payoff. So, if you’re ready to take control of your finances and unlock the door to a debt-free future, let’s dive into some money-saving strategies.

Create a Monthly Budget: Establishing a comprehensive monthly budget can help you gain better control over your finances and allocate more funds towards your mortgage payments. Tracking your income and expenses allows you to identify areas where you can cut back on spending and redirect those funds toward accelerating your mortgage payoff.

Automate Your Savings: Transfer funds from your primary bank account to a dedicated savings account or investment account. This helps you save extra money consistently without thinking about it. Automating your savings can make it easier to manage your finances and ensure you’re consistently working towards paying off your mortgage faster.

Unhook from the “Tap and Buy”: Avoid overspending by paying with cash. For some, using cash instead of credit or debit cards is a more effective way to manage a monthly budget and avoid overspending. This approach can help to ensure that spending aligns with your budget. The key is finding a balance that works best for your financial situation and habits.

Avoid Buy Now Pay Later: Don’t purchase items on layaway or with deferred payment plans. These tempting deals may seem convenient in the short term, but they often lead to long-term high-interest charges that can disrupt your budget and cause unnecessary stress.

Use Cashback Apps: Cashback or discount code apps and websites when shopping online or in-store to earn money back on purchases.

Maintain a High Credit Rating: Pay your bills on time (set up automated payments) and keep balances low. When it comes to credit limits, a higher limit and lower monthly usage will help your credit rating. A good credit score can result in lower interest rates and better mortgage terms.

Minimize High-Interest Debt and Large Purchases: Exercise caution when purchasing expensive items or taking on high-interest bad debt. Consider buying a used car outright or securing low-interest financing. Avoid leasing unless it offers significant tax benefits, especially for self-employed individuals. Exercise restraint in purchasing expensive items that increase debt without corresponding long-term value.

Make a Double Mortgage Payment: Making a double payment once a year can shave years off the total life of the mortgage! This simple step can save you over $26,000 in interest on a 25-year amortized mortgage with a 5.5% fixed rate. Leverage an annual work bonus or tax return as a potential source of extra income to make these payments.  If the yearly lump sum seems daunting, consider increasing your payment by 10% each year to shave 4 years off your mortgage. A 5% yearly increase can lead to being mortgage-free in 18 years. You can also increase your payment by the amount of your annual raise (assuming you got one) to expedite your mortgage payoff.

Increase Your Payment Frequency: Switching your mortgage from monthly to biweekly accelerated payments can shave over 3 years off your mortgage. At $2,000 a month, three years of no payments are worth $72,000, and that doesn’t include the mortgage interest you just saved!

Make an RRSP Contribution: An RRSP contribution allows you to maximize your income tax refund, which (when applied to the principal of your mortgage annually) is one of the fastest ways to pay off your mortgage.

Start a Side Hustle: A side hustle can significantly boost your income. If you enjoy driving and meeting new people, consider becoming an Uber driver; it offers flexibility and the chance to earn on your own schedule. If you have a knack for cleaning or handy work, offering your services locally can be both profitable and rewarding, as there’s always a demand for reliable help. Selling unwanted items from around your home or flipping garage sale finds online is another excellent option—it’s surprising how much value can be found in items you no longer need.

Renegotiate When Rates Drop: Revisiting your mortgage when rates drop can yield significant savings. Consult with a mortgage agent (Hi 👋) to determine if renegotiating your mortgage makes financial sense or take advantage of mortgage rate protection!

Switch to a Shorter Term or Variable Rate: Consider switching to a shorter mortgage term in a higher-interest-rate environment, allowing you to refinance earlier than the standard 5-year mortgage term. Variable-rate mortgages typically carry lower penalties if you need to exit your mortgage earlier than a full 5-year term. Given that current variable rates are higher than fixed rates, the traditional benefit of paying off your mortgage faster with lower variable rates may not apply. It’s essential to assess your specific financial situation and market conditions.

Take Your Mortgage With You: When moving, consider porting your existing mortgage to the new property to avoid penalties or higher rates on a new mortgage.

Employer Benefits: Many employers offer benefits that can save you money, such as discounted gym memberships, transportation passes, and local business discounts. These perks can help you reduce monthly expenses and direct those savings toward paying off your mortgage faster. Check with your HR department to explore all available benefits.

Rental Income: Generate additional income by renting out spare rooms, Airbnb, unused garage space, or basement space in your home. House hacking is an effective way to reduce overall housing costs.

Prioritize Debt Repayment: First, pay off debts with the highest interest rates to minimize interest expenses. Be sure to consider tax implications and prioritize non-tax-deductible debts over those that offer tax benefits.

Increase Your Mortgage: Do you have a high balance of other debt besides your mortgage? Consider increasing your mortgage total for debt consolidation to secure a lower rate, as this can be beneficial for paying off high-interest debt, such as credit cards or car loans and providing greater monthly budget flexibility.

Clear Good Debt Last: Pay off debt for assets that appreciate in value, such as mortgages, last as they contribute positively to your net worth.

Make Your Mortgage Tax-Deductible: Explore options to make your mortgage tax-deductible if you are self-employed or own rental property with Rental Cash Damming.

Negotiate Bills: Be bold and negotiate with internet providers or cell phone carriers for better rates or discounts. Loyalty doesn’t always pay off, so it’s worth asking if any promotions or incentives are available.

Shop Around for Insurance: Periodically review your home, auto, and life insurance policies to see if you can get better rates elsewhere. Many insurance companies offer discounts for bundling policies or a good driving record.

Reduce Utility Costs: Reduce energy consumption by turning off lights and unplugging electronics when they’re not in use. Consider investing in energy-efficient appliances and installing a programmable thermostat to regulate heating and cooling costs.

Downsize Your House: If your current property no longer meets your needs, consider downsizing to a smaller home. This can significantly reduce mortgage payments and maintenance costs.

Take Advantage of Rewards Programs: Sign up for rewards programs at your favourite stores and gas stations to earn rewards on your purchases. Choose a credit card reward program to earn cash back, points, or miles on everyday purchases that offers rewards that you’ll actually use to reduce your monthly budget. Be sure to pay off your balance in full each month to avoid interest charges and make the most of your rewards. With strategic use, you can earn valuable perks like cash back or gift cards, turning your everyday spending into tangible rewards.  BONUS: Look for credit card and rewards programs that allow you to earn double (or even triple) rewards.  Points/Rewards Stacking can significantly improve the rewards benefits earned.

Remember, achieving financial freedom requires discipline to build positive financial habits and manage your finances.

Are you looking to explore the best strategies for paying off your mortgage faster?

Let’s book a call and create a mortgage plan to pay off your home quicker.

The gap between a homeowner who is mortgage-free at year 18 and one still paying at year 25 is almost never income; it is the accumulation of small, consistent decisions made over time.

Colin has seen these decisions compound in real client files, and the 25 tips in this article are drawn from patterns that have repeatedly worked across a wide range of incomes, property values, and mortgage products. Accelerated bi-weekly payments alone can shave years off a standard 25-year amortization without changing anything else about your budget.

Colin Ballantyne is a Mortgage Agent Level 2

Licenced with BRX Mortgage (FSRAO Licence 13463, Licence ID M22000539), serving clients across Oakville, Burlington, Milton, Mississauga, and Ontario-wide.