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A toy log cabin sits on $20 bills. (iStockphoto / Getty Images)
A toy log cabin sits on $20 bills. (iStockphoto / Getty Images)

I'm on track to be mortgage-free by 31 Add to ...

Two years ago, when I was 27, I took all my savings and bought a $425,000 house in Toronto with the goal of being mortgage-free in four years. With two years to go, the goal is in sight.

I’m going to own my own three-bedroom bungalow in Scarborough by my 31st birthday.

But the cost has been high – financially and personally. I lived in the basement and rent out the rest. To save further, I don’t own a cellphone or have cable TV or a car. On top of a full-time job, I work part-time evenings and weekends. And I’ve been committed to this frugal lifestyle for some time; while at Ryerson University studying business management, I lived with my parents. While my friends were out driving cars, buying fast food, drinking and partying, I worked three part-time jobs, purchased used textbooks, brown-bagged my lunch, and cycled to school.

Being a homeowner was the goal, even before graduation. By working part-time during school and and full-time in the summer, you can save a lot. I earned $20,000 a year, enough to cover my tuition and start saving for a house. In April 2009, I graduated with a bachelor of commerce degree. Not only did I graduate debt-free, but with money in the bank, saving $50,000 towards a down payment.

Even after landing a position as a pension analyst with a global pension and benefits consulting firm, my student lifestyle continued, with the goal of saving a 5 per cent home down payment, contributing $250 per week to a low-fee mutual fund account.

Despite being prepared, entering the Toronto housing market lived up to its reputation; housing prices were skyrocketing, and a lot of first-time homebuyers were in danger of being priced out of the market.

It took nearly three years of housing hunting and two failed offers before the dream of homeownership became a reality. In June 2012, I purchased a beautifully renovated three-bedroom bungalow for a modest $425,000. Lesson learned: if you’re willing to purchase in an up-and-coming neighbourhood, you can avoid a bidding war.

As a single homeowner, even with a sizable down payment of $170,000, it’s still tough to afford a house in one of Canada’s most expensive housing markets. I live in the basement and rent out the main floor. The host of HGTV’s Income Property, Scott McGillivray, who lived in the basement of his first house for nine years, served as an inspiration.

Cutting back on daily expenses has been a must. Purchasing groceries at discount supermarkets, cooking meals at home, and not having cable, can add up to thousands in savings a year.

The biggest secret to being mortgage-free is taking advantage of pre-payment privileges. According to the Canadian Association of Accredited Mortgage Professionals, only 38 per cent of people with mortgages made pre-payments in 2013.

Starting with a weekly mortgage of $280, I increased my payment by 15 per cent and doubled it up each year. Whenever I receive freelance writing income, I make a lump sum payment. Instead of paying off my mortgage in 25 years, I’ll pay it off in four years and save thousands in interest.

Reaching mortgage freedom in only four years isn’t easy. Working on weekends takes priority over socializing with friends. This will be short-term pain for long-term gain – once the mortgage is paid off, I plan to quit working on weekends before eventually moving upstairs. And who knows – maybe I’ll even take the time to get married – it would be nice to share the space, after all.

Despite the sacrifices, being mortgage-free and achieving financial freedom will be well worth it at only 31. And as soon as the mortgage is paid off, I plan to celebrate by travelling across Europe before embarking on my next goal, retiring early at age 55.

Sean Cooper is a personal finance freelance writer. He is on Twitter @SeanCooperWrite and blogs on his personal website.

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