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My Strategy to Pay off a Mortgage Ultra Fast

In late 2011 I took out a mortgage on a house to live in that was around 5 times my yearly income, but I managed to pay it off totally in about 3 and a half years. I did this with no gifts or support from other family members. I did not have to rent out rooms in my home. I did not have to live like a pauper. In fact, although I maintained a fairly strict savings strategy, I lived quite well, treating myself to new cameras, computers and overseas holidays and pizza most weekends.

I’m not a financial advisor, or property guru. I’m just a blogger sharing my personal experience. Up to you to decide if this could work for you.

So how did I pay off a large mortgage in such a short period of time? Mathematically, it shouldn’t work out, if the mortgage was around 5 times my yearly income, how did I pay it off in around 3.5 years? There was interest charged on the loan, and anyway, even if it was an interest free mortgage, it wouldn’t have been possible to pay it off that quickly.

How I did it

By buying another house. Taking out another mortgage, on another house to buy it, and leasing it out as an investment. I bought another, cheap property in a high growth area. An area that had a lot of cheap housing at the time, and I found this place that the owner wanted to offload quickly and was ready to take a low price on. The good thing I’ve noticed about low cost housing areas is that they tend to have a high rent to cost ratio, meaning you can get the same rent per week as you may get from a more expensive house in a better area. I had also done my research, and knew that the area was “up and coming” in that, over the next few years houses were likely to grow in value significantly because of several infrastructure projects in the area putting houses and land in higher demand. For me, all this worked out:

  • The investment property mortgage was paid for by the tenant’s rent.
  • The investment property provided some tax benefits giving me some spare cash which I put into the mortgage on the house I was living in.
  • The investment property sold at a high profit compared to my original purchase price, and the tenants had paid some of it off for me.
  • I used the profit to pay off the loan on the house I was living in.

Now, I’m just at the tail end of a subdivision project. Read up how that turned out to be successful.

If you have any thoughts or tips to offer, I’d love to hear from you.

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