Home > Finances > Debt > 5 Steps to Your Last House Payment

5 Steps to Your Last House Payment

The faster you pay off your mortgage, the more money you’ll have for…whatever you want! Here are the steps we took towards our last house payment.

“Focusing on paying off the mortgage has [several] benefits, both financial and emotional,” writes John Heinzl in “The Best Investment? Paying Off Your Mortgage” in The Globe and Mail. “It’s a forced savings plan, and it gives you a goal to work toward. When you finally pay the mortgage off, you’ll have far more financial flexibility – to invest, save for your kids’ education, cut back to part-time work, live on one salary instead of two, take a vacation, or countless other things.”

My husband and I made our final mortgage payment last month, and we’re planning to sell our house and buy one that costs twice as much. Yes, we’ll have another mortgage…but when we pay that mortgage off, we’ll have enough money to retire!

Here’s how we made our mortgage payments disappear…

5 Steps to Your Last House Payment

If you have money to pay off your mortgage but aren’t sure if you should pay off your mortgage fast or invest in other financial options, read Is Paying Off the Mortgage a Good Idea?

And if you have no money (like we didn’t) and want to make your last house payment, check this out:

Consider switching to a new mortgage broker or bank

Mortgage brokers don’t always offer better interest rates and loan terms than banks. If you aren’t happy with your current mortgage lender or if you’re buying your first home, shop around for brokers and banks. Learn about adjustable rate mortgages versus fixed rate mortgages, play with the mortgage calculators, and be realistic about what you can and can’t afford.

Save money for the mortgage renewal

Some mortgage loans are renewable every few years; if you’re renewing your mortgage, try to make a large lump sum payment. A $10,000 payment would be fantastic, but every $1,000 or $5,000 helps. Make sure your mortgage lender accepts extra payments (not all do!) – and that you’re not getting charged for making extra payments.

Put financial windfalls, work bonuses, etc towards your mortgage

I’m a full-time freelance writer and blogger; I don’t earn a lot of money, but some months are better than others! Sometimes I receive magazine assignments that pay $1,000 or more. At first, we weren’t sure what to do with those little “bonuses” – and we invested it in stocks and mutuals for awhile. But, the economy crashed and we decided to pay off our mortgage…which I think was the best financial decision we’ve ever made.

Increase the frequency of your mortgage payments

We paid about $2,000 towards our mortgage every two weeks. It was financially demanding…but I’ve learned that saving up to $500 a month is not as difficult as it sounds. Can you increase your mortgage payments, and make payments more frequently? It’ll go a long way to paying off your mortgage faster. But, make sure your mortgage lender doesn’t penalize you for making extra loan payments.

Review your mortgage interest rates regularly

Don’t ignore your mortgage! Revisit your interest rates and mortgage terms every quarter; stay up-to-date on interest rates and new products or services that could save you money. If your lifestyle changes (eg, you get a raise at work, or develop an extra source of income), then you might want to make changes in your mortgage payments.

For instance, you may have started out with a lower-rate adjustable rate mortgage when you first bought your house, but you may want to switch to a more long-term affordable fixed-rate mortgage after a few years.

For more tips on paying off your mortgage, read 5 Ways to Save Money Every Month While Paying Off a Big Mortgage.

Do you have any questions or thoughts on being free from mortgage payments? Please comment below…


Need encouragement? Sign up for my weekly "Echoes of Joy" email - it's free, short, and energizing. Like me!

Is your relationship in trouble? Get 7 Steps to Fixing Your Marriage from relationship coach Mort Fertel. It's free and helpful, no strings attached.

Leave a Reply

Your email address will not be published. Required fields are marked *

9 thoughts on “5 Steps to Your Last House Payment”

  1. Laurie, you sure are brave. We moved up into a 700K house after selling our 500K one. I was really depressed for a while after being mortgage free for many years. Now that we paid off the mortgage it’s great. No more mortgages or moving up. I guess it helps not having the expense of kids to be able to pay down your mortgage that quickly. Best of luck.

  2. Hi Cory,

    We decided to take on another mortgage because we wanted to live in a beautiful home with an ocean view! We ended up buying a house for 1.1 million dollars, after selling our cottage for $500,000.

    It is a burden to have a $500,000 mortgage, but we’ve chipped away at it. I think we’re at $250,000 now. It’s worth it — I have never loved a house the way I love the one we live in. We have two different ocean views, and the house is so unique and comfortable and beautiful…it’s worth taking on another huge mortgage.

    But, I sure do miss those days of living mortgage-free….


  3. Laurie Pawlik-Kienlen

    We paid off our mortgage and enjoyed freedom for about 4 months…then we bought a 1.2 million dollar house! Now we’re in house debt up to our eyeballs again…..but I love my new house 🙂

  4. It is significantly better to make the $100 monthly payment verses waiting until you have an equally large lump some, in this case $1200. The interest you are charged would be reduced each month so you are paying more toward the principle each month. At the end of five years of extra monthly payments, you will have paid twice as much toward the principle than an end of year lump sum. That will shave years off your loan. This extra monthly reduction in the principle load is why a bi-monthly payment frequency is so effective at saving you money (that and you make an extra payment each year).

  5. I am wondering if making once a year large principle payment is more or less effective than making a $100 extra monthly principle payment?

  6. Laurie Pawlik-Kienlen

    Thanks for the mortgage payment tip, Bruce! I bet you’ve paid off your mortgage already…it sounds like you know what you’re talking about. And, I like the idea of a nice vacation after paying off your mortgage (but I’d rather take vacations every year AND pay down my mortgage!).

    And Shanna, thanks for the website…those mortgage calculators sure do come in handy…

    Here’s to achieving your financial goals!!!
    .-= Laurie Pawlik-Kienlen´s last blog post …Establish Good Financial Habits – 6 Ways to Make Money Saving Tips Stick =-.

  7. Nice and informative article, I am sure any tips and tricks to help bring down the mortgage are very helpful to everyone. I was on the homesourcetoronto.com website and there is a mortgage calculator on the main page witch shows the mortgage amount based on down payment and interest rate. Quite cool.

  8. When getting a mortgage be sure to get one that allows you to make lumpsum payments each year of, say, no less than 15%. Also your mortgage should be flexible so you can make double payments. To help “find” extra money, plan on interest rates that are a few percentage points higher than a current variable (or adjustiable) rate but have a variable rate mortgage. Right now the variable rate is around 2%. The difference between a 6% mortgage payment and a 2% payment is about $200 per bi-weekly payment on a $200,000 mortgage. That extra money paid directly to the principal, rather than interest, will help eliminate your mortgage faster. Set the Goal: 5 years to mortgage free! Then a nice vacation.