Mortgage free!!! Now what???

Mortgage free!!! Now what???

The time has come: we’re mortgage free!!! Now what???

Read on. 🙂

Mortgage free!!! Now what???

Image: Pexels. 

We’re mortgage free!!! Now what???

I’ve heard and read from many successful early retirees, semi-retirees and full-on retirees that life reallly begins once you’re debt-free. 

We hope to experience that now.

How did we do it?

What was the math like?

Here was the journey in a nutshell, what we did and tried to avoid if you’re seeking a mortgage-free blueprint:

  • For the most part, we avoided “too much house”. Yes, we did (recently, as in five years ago) live in a sizable bungalow just outside the city for a number of years, but we’ve since downsized our home along with our environmental footprint. Even though our salaries could have potentially afforded more McMansion that was certainly not something we needed nor wanted. I believe the ability to get housing and transportation right in your asset accumulation years can be a major key to your financial success long-term…$5 coffee decisions are not stealing your early retirement dreams!

Two expenses stealing your early retirement dreams (that are not coffee)

  • We took advantage of our accelerated payments/mortgage terms. We believe it’s important to read the fine print: get a mortgage product that meets your needs. In our case, we wanted (and did) take advantage of our mortgage prepayment options and lump-sum payment opportunities over time to reduce our mortgage debt – especially when borrowing costs were cheap. There is always a tradeoff that exists when it comes to investing vs. mortgage payments.

The definitive answer to paying down your mortgage or investing

  • We put our raises or salary increases to mortgage work. If you want to pay off your mortgage debt faster, a good, simple approach is to use any salary increases from work as the aforementioned lump-sum mortgage payment from time to time – and avoid using any raises from work over the years as any spending windfall. You won’t miss the income and you’ll potentially knock off at least a few months from your mortgage amortization period if you do. 

After using these simple tactics….after paying off >$350,000 over the last decade we’re now mortgage-free!

We’re mortgage free!!! Now what???

Nobody, not even the most seasoned investor or financial expert, can successfully predict the markets.

So, as a passionate DIY investor, one of our goals moving forward is to simply remain the investing course.

We’ll also manage market volatility using a modest cash wedge designed to support us in any semi-retirement planning.

The Cash Wedge – Managing market volatility

Based on what some financial experts share from time to time, there are also some “do’s” and “don’ts” when it comes to being mortgage-free:

My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.

119 Responses to "Mortgage free!!! Now what???"

  1. Hey Mark,

    Congrats on this major wealth-creation milestone! Takes a long time to achieve this. I was fortunate to hit the mortgage free point at the age of 35. And that $700,000 home we bought is now worth just about $1.8 million. All the while, we’ve been stashing that cash that would have been mortgage payments away in RSPs/Pensions/TFSA’s etc.

    Question for you. I’m closing in on 50 and thinking about taking early retirement. Probably about 2 years from now. I expect to retire with an annual Defined Benefit Pension of ~$65,000/yr (unreduced starting at 61). Based on my calculations, I believe that the estimated lump-sum commuted value of the pension is anywhere from (approx) $1.2 million to $1.3 million.

    With the house and investable assets (mostly non-reg) of around $1.5 million, would you elect to take the lifetime annual pension or would you elect to take the commuted value and structure a dividend stream instead? Interested in your thoughts.

    Thanks.

    Reply
    1. Nice to hear from you, Joe!

      Wow, congrats on mortgage-free at 35. Impressive…

      A DB of $65k per year is sweet – I would consider that a “big bond” which is excellent. Given interest rates are higher now, that commuted value could be lower but I suspect you’re in the ballpark.

      With a paid off home, investable assets around $1.5M, personally, I would be inclinded to keep the DB plan and not commute.
      Thoughts on this post?

      https://www.myownadvisor.ca/should-i-take-the-commuted-value-of-my-pension/

      If you do not commute, this is income that is likely:
      a. very secure,
      b. inflation-protected?,
      c. is a risk transfer tool for you to the pension administrator.

      Happy to get your thoughts, back!
      Mark

      Reply
  2. I could not resist offering this suggestion. I often say buy the bank stocks with some of your new found cash flow…then you make money off of other people’s mortgages…..haha (only half joking).

    Would have been one of the best investments you could make over the last 35 years….

    Reply
  3. Hey Mark,

    Congrats on paying off the mortgage. Great accomplishment. We have about 18 months left on ours! Do you have any thoughts/advice on what to do when the mortgage is complete? Some people suggest to discharge the mortgage. But I’ve also read that getting a HELOC (even if you never use it), is a good safety net and can protect from mortgage fraud? Step 2, contact your insurance company? Any other important things to consider?

    Thanks!

    Reply
    1. Thanks, Mike!

      I have two thoughts:

      1. Discharge the mortgage entirely – never worry about it again and own it free and clear.
      2. Pay off the mortgage, keep the HELOC associated with it near-term, use bank lien as some safety but also as a safety net to your point. Can always discharge later. 🙂

      We’re following path #2.

      Thoughts on that back on congrats on 18-months or less. Mortgage-free feels great and you’ll love it.
      Mark

      Reply
  4. Hi Mark,

    Congrats on the huge milestone of paying off the mortgage!

    With a few more payments we will be mortgage free ourselves this year! What comes next who knows perhaps more regular vacations. The idea of not having to pay someone else (the bank) feels good! We also plan on slowly topping off our TFSA room as we had taken some out last year to prepay the mortgage.

    Reply

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