The sums involved are so huge. Due to the exorbitant cost of housing, the majority of people must take out large loans in order to begin their housing journey. Typically, mortgage loans last for 25 years, but nowadays you can stretch them right out to 40.
For most homeowners, their mortgage is their biggest bill each month. That’s a hefty chunk of cash disappearing from your current account, month in, month out, for decades.
I recently gave this some thought because a friend of mine paid off her credit card debt, freeing up funds that had been used to make repayments. The question came up about whether to use the spare money to invest, or towards her mortgage.
Right now, mortgage rates are much lower than historic returns from investing. On paper, the choice is clear: invest those extra pounds rather than paying off mortgage debt. If your mortgage rate is only 2% but you think investing could yield more than 5% of your income, you should go straight to the stock market!
Trouble is, those numbers are not set in stone. Although I love investing, there’s no assurance that mortgage rates won’t go up and there’s always a chance that your money could lose all of its value. But if you clear your mortgage, no-one can take your home away.
As someone who is extremely fortunate to have paid off their mortgage, I believe that the decision is more psychological than practical. It’s not just about the numbers. It’s also about how you feel.
It takes a lot of time and effort to pay off a debt as large as a mortgage, unless you win the lotto or receive a sizable inheritance. Thus, it’s especially crucial to cling to the idea of living mortgage-free and to the fantasy of what it might feel like.
Owning a home is a dream for many, but the reality of a hefty mortgage payment can often feel like a heavy weight on your shoulders. But what if you could shed that burden? What if you could wake up each morning knowing that your home is truly yours free and clear?
The feeling of being mortgage-free is often described as liberating, empowering and even euphoric. It’s a weight lifted a door opened to new possibilities, and a sense of security that permeates every aspect of your life.
But beyond the emotional benefits there are also tangible advantages to being mortgage-free. Let’s delve deeper into the joys and benefits that await you on the other side of your mortgage journey.
Freedom from Financial Stress
Imagine a world in which a sizeable portion of your monthly expenses is not allocated to a mortgage payment. That’s the reality of being mortgage-free. This newfound financial freedom opens up a world of possibilities:
- Early retirement: With no mortgage payments to worry about, you can choose to retire earlier and enjoy your golden years without financial constraints.
- More disposable income: The money you used to pay towards your mortgage can now be used for other things, like travel, hobbies, or simply enjoying a more comfortable lifestyle.
- Greater financial security: Being mortgage-free means you’re no longer vulnerable to rising interest rates or economic downturns that could impact your ability to make payments.
Increased Peace of Mind
The constant pressure of making mortgage payments can take a toll on your mental well-being. Being mortgage-free brings a sense of peace and security that is invaluable.
- No more sleepless nights: You won’t have to worry about making your next mortgage payment or whether you’ll be able to afford your home if your financial situation changes.
- Reduced stress levels: The financial burden of a mortgage can contribute to stress and anxiety. Being mortgage-free can help you relax and enjoy life more fully.
- Greater confidence in your financial future: Knowing that you own your home outright can give you a sense of confidence and stability that is hard to achieve when you’re still paying off a mortgage.
Flexibility and Choice
Being mortgage-free gives you the freedom to make choices about your life that you might not have had before.
- Change careers: You’re no longer tied to a high-paying job just to make your mortgage payments. You can pursue your passions and find work that is more fulfilling, even if it pays less.
- Downsize or move: You can choose to downsize to a smaller, more manageable home or move to a new location without worrying about the financial implications of selling your current home.
- Travel the world: With no mortgage payments holding you back, you can finally take that dream trip around the world or spend more time exploring your own backyard.
A Legacy for Your Loved Ones
You can leave your children or other loved ones with a priceless legacy if you own your home outright.
- Financial security for your family: Your children will inherit a home that is free and clear, giving them a significant financial advantage in life.
- Peace of mind for your loved ones: Knowing that your family will have a secure place to live can bring you great peace of mind.
- A lasting legacy: Your home can become a cherished family heirloom, passed down through generations.
The Journey to Mortgage Freedom
Although there are indisputable advantages to being mortgage-free, it’s crucial to keep in mind that the road is not always simple. It takes discipline, sacrifice, and a long-term commitment.
Here are some tips to help you achieve your goal of mortgage freedom:
- Create a budget and stick to it: Track your income and expenses carefully and identify areas where you can cut back.
- Make extra mortgage payments: Even small extra payments can make a big difference over time.
- Refinance your mortgage: If interest rates have fallen, you may be able to refinance your mortgage to a lower rate, saving you money on interest payments.
- Explore additional income streams: Look for ways to earn extra income, such as taking on a side hustle or investing in rental property.
Although achieving mortgage freedom may not be simple, the benefits are well worth the work. The feeling of security, independence, and emancipation that accompanies being a home owner is extremely valuable.
Freedom to use that money elsewhere
After we paid off our mortgage, my spouse and I decided to take advantage of our time instead of having more money.
But if you’re happy to stay in the same jobs, slaying your mortgage leaves you with spare money. All of a sudden, you have the option to spend lavishly on vacations, home upgrades, and clothing, save it for investments and pensions, or find a happy medium.
I’m going to fly the flag for marital harmony.
Money worries are regularly identified as a leading cause of marriages splitting up. Even though paying off your mortgage won’t stop someone from snoring or eating cereal in an especially annoying way, it will relieve a significant amount of your financial burden.
For my husband in particular, the only good mortgage is no mortgage at all. So he’s definitely much happier living mortgage free!.
Clearing our mortgage has given us safety, security, freedom and less stress. No sleepless nights worrying where the mortgage money will come from. No ‘what ifs’, concerned about future rate rises, rule changes or the uncertainty of investment performance.
A true entrepreneur might rather take advantage of low interest rates while they last, take out large loans, and make investments elsewhere.
Personally, paying off our mortgage brought enormous peace of mind. To us, that’s priceless.
Now – over to you. If you have already paid off your mortgage, please share your thoughts in the comments section; I’d love to know how it feels!
Freedom to choose different jobs
In order to be eligible for a mortgage on my first apartment, I worked at my first job for far longer than I would have liked.
However, being able to pay off our mortgage entirely and taking on less debt allowed my spouse and me to pursue other career goals. With lower bills, we could get by on less money. We weren’t trapped in jobs just to meet our mortgage.
Back in London, I was able to go freelance after maternity leave. Our mortgage was reduced as a result of making overpayments, which spared me from having to take a full-time job.
After we moved to Suffolk and paid off our mortgage, my husband was able to return to his job in the charity sector, which meant less stress and shorter hours. I could carry on earning a living as a freelance journalist and later as a blogger, without having to worry about my accounts not meeting the more stringent guidelines for self-employed borrowing. We could both spend more time with our children.
3 Things I Learned After One Year of Living Mortgage Free
FAQ
Is it worth it to be mortgage-free?
What it feels like to be mortgage-free?
How does it feel to have mortgage paid off?
What age should I be mortgage-free?
What is it like to be mortgage-free?
Since becoming mortgage-free, I am trying to live a more purposeful life. To tune into my intuition and calling in life. There are numerous psychological and health benefits of living a purposeful life. For me, being mortgage-free is a catalyst to this. It has been a mindset shift that I was not anticipating.
Can you live mortgage-free?
Good news: it’s definitely possible – but you have to be willing to do things differently than most people. You have to think outside of the narrowly-defined box that most people live in. Let’s take a look then at how to live mortgage-free and explore some ideas you may not have considered. 1. The Stepping Stone Strategy
Why is living mortgage free a good idea?
Living mortgage free released my dad from the hefty financial burden of owning a home. It also settled his worries and brought him peace of mind. “If anything happened to me, I wanted to know that the bank could never take the house away from your mom,” my dad always says. “I wanted to know that you would be safe here without me.”
Do baby boomers live mortgage-free?
Baby Boomers re-financed their mortgages when rates were low and now many of them live mortgage-free. Spencer Platt/Getty Images © Spencer Platt/Getty Images More Americans than ever own homes without having to make mortgage payments. Mortgage-free homes jumped 5% between 2012 and 2022 to nearly 40%, according to data from the U.S. Census Bureau.