How much do you prepay on your mortgage?

[nzwasp]

and when do you think it will be paid off?

Was thinking about how much more I could afford to put towards my mortgage and I hope to be all paid up within the next 8 to 10 years.

Currently our monthly mortgage is around $2200 (around $1300 goes towards principle) and we also put in a further $500 each payment ($1000 a month). Although all my figures could go to shit if the mortgage rate is really high when I renew in 2022. Im hoping to be down to 300K owing by the time we renew currently we are sitting around 470K owing. If my wife's oil company ever makes money again we might put some of her bonuses towards it too.

[Mitsu3000gt]

I would put the absolute minimum towards it provided you can make more than 2.5% or whatever your mortgage rate is on that same amount in investments, which is very easy to do and it basically gives you an interest free mortgage. I know people in both camps though - some that throw every penny at it to pay it off ASAP, and some that do the minimum because they can do much better for themselves by turning that extra money into a lot more money.

[dj_rice]

I'll pay mine off before 2020. Started my mortgage in 2013. But I'll be re-doing it all over again when I plan to move back to Calgary and build my forever home.

I was doing the bi-weekly accelerate payments, and double up payments on top as well as the Annual Lump Sum 10% Anniversary payment as well. But since I now have car payments, I've shifted the double up payments towards my car payments.

[A790]

This quote is hidden because you are ignoring this member. Show Quote

I would put the absolute minimum towards it provided you can make more than 2.5% or whatever your mortgage rate is on that same amount in investments, which is very easy to do and it basically gives you an interest free mortgage. I know people in both camps though - some that throw every penny at it to pay it off ASAP, and some that do the minimum because they can do much better for themselves by turning that extra money into a lot more money.

When we bought our second house, we prepaid the mortgage for the first 2 years. After reviewing our financial goals, we decided to shift where our cash went and started investing the funds instead.

Money that was earmarked for the house now goes into a bond ETF - ZAG, ZLC, etc. - that pays a yield higher than the interest we pay on the mortgage. While we have seen some price fluctuation on the bond ETFs, it hasn't been negative to the point that's changed our math.

Of course, that's assuming you look beyond what the last 10 days on the market have been like

[Twin_Cam_Turbo]

Up until my first renewal this month I was paying the absolute maximum ($21500 lump sum per year) extra onto my mortgage and had bumped my payments up to the maximum without penalty too. Now I’ve reduced the payments back to the original amount which was a 22 year amortization and I’m going to ride the minimum payment train for the next three years, with plans to pay it out at the end of the term.

[jwslam]

I know I'm stupid with money so I max myself out into this forced savings plan.

If I reduced the payments, I'm sure that money would be spent in stupid ways rather than growing.

[RX_EVOLV]

Same as what other people have done here. The interest rate is low enough that I've been diverting what i would normally put on the mortgage as accelerated payments to investments. My plan is once my renewal date is up and if the mortgage rate is significant higher, then I'll redirect those investments to paying off the mortgage principle and get back on the accelerated payment plan.

[HiTempguy1]

This quote is hidden because you are ignoring this member. Show Quote

Of course, that's assuming you look beyond what the last 10 days on the market have been like

This quote is hidden because you are ignoring this member. Show Quote

I know I'm stupid with money so I max myself out into this forced savings plan.

If I reduced the payments, I'm sure that money would be spent in stupid ways rather than growing.

This, all depends on who you are as a person. Also, regardless of what makes "the most sense", having your house completely paid off is an amazing thing that opens up other opportunities to you. It's all about cashflow, not having that mortgage payment can make a big difference. End of the day though, my opinion is the important thing is to have the mortgage paid off by retirement, or at least have it to a level that it costs no more to pay than equivalent rent would.

[nzwasp]

I feel like everyone on this thread has a much smaller mortgage than I do, or more equity. I started out with a 600K mortgage in mid 2012. I might be more inclined to redirect the prepayments if it was closer to say 200K. Otherwise I'll be paying it off until im late 50s.

[Twin_Cam_Turbo]

This quote is hidden because you are ignoring this member. Show Quote

I feel like everyone on this thread has a much smaller mortgage than I do, or more equity. I started out with a 600K mortgage in mid 2012. I might be more inclined to redirect the prepayments if it was closer to say 200K. Otherwise I'll be paying it off until im late 50s.

I definitely do, my original balance was $206320.00 starting lol.

[Mitsu3000gt]

This quote is hidden because you are ignoring this member. Show Quote

I feel like everyone on this thread has a much smaller mortgage than I do, or more equity. I started out with a 600K mortgage in mid 2012. I might be more inclined to redirect the prepayments if it was closer to say 200K. Otherwise I'll be paying it off until im late 50s.

Why does it matter how long you're paying it off if it's free money? Any time you can use someone else's money for free while you make more money with yours is a win - provided you can make more than 2.5% or whatever on investments, anything on top of that is yours to keep.

My first mortgage was around $400K and I put the minimum down-payment down and the maximum 35 years - I made way more money than I ever would have by throwing every penny towards the mortgage.

My parents' generation though, most mortgages were around $150K-$200K for what is now a $700K-$1M+ house, but they were paying like 15%-20% interest - not so easy to reliably beat that with investments haha.

[jwslam]

This quote is hidden because you are ignoring this member. Show Quote

I feel like everyone on this thread has a much smaller mortgage than I do, or more equity. I started out with a 600K mortgage in mid 2012. I might be more inclined to redirect the prepayments if it was closer to say 200K. Otherwise I'll be paying it off until im late 50s.

Conversely not everyone is dual income $250K+ .

[max_boost]

I found my forever home by moving home

Okay I think it depends on your relationship with money and the markets. Everything is basically a long game.

You can pay off your home faster but I wouldn't do it at the expense of lifestyle.

Say you have to make an extra 12-24 monthly payments in the end, does it really matter?

[nzwasp]

I'm not quite that either. And also if my wife ever gets downsized by her company then we will be having issues paying off a huge mortgage.

[Disoblige]

This quote is hidden because you are ignoring this member. Show Quote

I'm not quite that either. And also if my wife ever gets downsized by her company then we will be having issues paying off a huge mortgage.

Which probably leads to the elephant in the room. Why did you have a 600k mortgage lol...
Obviously you don't need to answer anything, but I'm sure that was on most people's minds.

[Manhattan]

Very personal question. There's smart people in both camps - pay off ASAP vs minimum payments. All depends on your spending habits, investment skill, time horizon, risk tolerance.

Buffett said 30 year mortgage is one of the best finance tools ever. The idea is to borrow money at something like 5% while you make 10 to 20% in the markets year after year. Although no matter how good you are I don't think you'll be guaranteed anything close to 10% given where valuations are today and rising interest rates. 6% is probably a more reasonable target for the next 10 years and that comes with lots of volatility. The savings on a 2.5% to 3% mortgage is nothing to scoff at given that the interest you're saving is all tax free, you'd have to earn roughly 5% in the markets to come to the equivalent amount of savings. That's a completely risk free 5%. As a bonus you will have more ammo if the markets really sour and presents an opportunity for you to take advantage.

No right answer here. Lots of difference ways to arrive at the same destination.

[suntan]

My obligation is around $800/mth, we have it jacked up to over $1600. Owe about $128K. Trying to get it done in seven years.

[nzwasp]

This quote is hidden because you are ignoring this member. Show Quote

Which probably leads to the elephant in the room. Why did you have a 600k mortgage lol...

Basically lost money on our first house. 2nd house only put down 5% but the CMHC fees brought it up to 600K house was worth 620K. House is now worth over 750K. Should of stayed in the last house now we probably would be close to 200K left to go but my wife didnt want to live in arbour lake anymore.

Im guessing though the smaller the mortgage gets the less you can put towards it, the bank you are with wants to stretch out the time you take to pay it.

[suntan]

Lots of people owe > $500K on a mortgage. It's the new bikini wax.

[vengie]

Velocity Banking.