While a recent poll reveals that on average, Canadians believe they will be mortgage-free by the age of 55, those who have already achieved that goal have some advice: make a plan and be prepared for sacrifices.
A CIBC poll conducted by Harris-Decima reveals that, on average, Canadians currently holding a mortgage believe they will be 55 years of age by the time their mortgage is paid off, leaving them with a short window of opportunity to ramp up their retirement savings in their "mortgage-free" years. However, the poll also reveals some positive news - among Canadians in the poll who have successfully paid off their mortgage, they achieved mortgage freedom by 48 years of age - a full seven years sooner than current mortgage holders anticipate.
The poll reveals the extra steps and important decisions these Canadians made to accelerate their mortgage repayment. For example, a majority of mortgage-free respondents used one or more of the following strategies to pay down their mortgage faster:
52 per cent made lump sum payments annually when they could
42 per cent increased the amount of their regular mortgage payments
40 per cent increased the frequency of their regular mortgage payments
However, becoming mortgage-free faster isn't easy. To implement the strategies above, 78 per cent of Canadians who have already paid off their mortgage say they also made a number of sacrifices along the way. The poll found Canadians who have paid-off their mortgage did one or more of the following:
53 per cent said they skipped large, "unnecessary" purchases
53 per cent said they created a budget to track their spending
49 per cent cut down on extra spending, including restaurant and entertainment costs
38 per cent skipped vacations
"Being mortgage-free is a top financial priority for many Canadians, and this poll suggests that by having a plan, Canadians may be able to pay off their mortgage sooner than they anticipate," said. "Consider what you normally pay to your mortgage every month, and then imagine that dollar amount going towards your retirement savings instead. That really puts into perspective the difference paying off your mortgage even one or two years earlier can make."
"A key finding in this poll is that Canadians who have successfully paid off their mortgage made some difficult choices about how best to spend their money over the course of their mortgage," said Colette Delaney of CIBC. "They made debt repayment their number one financial priority, skipping vacations or holding off on unnecessary purchases along the way to ensure they were on the path to achieving their long-term goal of becoming mortgage free."