Seeing your mortgage go up in smoke…
I bet you’ve dreamed of it. Visualized it. Wished upon a star for it.
But … it’s still there. Always there. Seemingly devouring half your paycheque. Every. Single. Time.
I’ve got good news for you: burning your mortgage doesn’t have to be just some pipedream, it can be a reality sooner than you think.
In fact, I burned my first mortgage almost exactly 5 years after signing the papers - not the 25+ years the bank signed me up for.
You Think That’s Good? You Haven’t Met Sean!
I did pretty well on my first mortgage - but it was nothing compared to what Sean Cooper, author of Burn Your Mortgage: The Simple Path to Financial Freedom for Canadians, did under much harsher circumstances.
He paid off his in 3 years flat by the time he was 31. Oh, did I mention it was a $425,000 house in the 2nd most expensive real estate market of Canada? You guessed it: Toronto.
After his $170,000 down payment, only $255,000 of it was mortgage - but that’s still amazeballs!
How did he do it?
By making many, many smart moves but also by doing some things I do not recommend you repeat.
He worked 80+ hour weeks for years holding down 2-3 jobs at a time. There was his full time gig, plenty of freelance writing, and he used to work at the grocery store as well before he let that job go.
He also skimped on quality healthy food (that homemade pizza of yours barely counts Sean!)
So, when he asked me for advice about writing a book about his mortgage burning journey, I straight up told him to tone it down a lot.
I suggested he use himself as an extreme example of what is possible. Then, provide a menu of options people can choose from to cut down their own mortgage burning ETA. And that’s exactly what he did.
He divides the book into 3 parts:
Part 1: How To Save Money?
The first part of the book it titled Setting Yourself Up For Financial Freedom, but I swear it could have been titled “How To Save Money”.
He talks about many of the things I love to talk about here at HTS and actually covers a lot of ground in relatively few pages. There is a lot of practical money saving advice that never goes over the top so it is palatable for the everyday busy person.
No extreme guides here, just rapid fire money saving advice that will help you either save for, or pay off your house. It’s all really solid and well-written advice too. In fact, I found myself wishing I had written it myself.
The only quibble I have is that in a few places Sean’s numbers and money saving estimates are perplexing. They may make sense if he explained it fully, but with just a couple lines of detail per tip, it sometimes left me scratching my head.
For example, on p.34, he says you can save $1,000 a year by avoiding the latest iPhone every time a new model drops. He then goes on to say you should buy an older one second hand (still an iPhone) every few years instead. He also says a new iPhone costs around $600.
I just can’t figure how that adds up to $1,000 saved per year...
Used iPhones still aren’t cheap - they tend to hold their value, right? Even if you’re on the bleeding edge of tech, you still likely aren’t buying a brand new iPhone every single year. More like every 2 years. So that’s a maximum of $300 per year saved. If you factor in the cost of the 2nd hand phone, it’s even less.
Most of his numbers do check out though, but I would double check them for your personal situation first before thinking your savings are going to be bigger than they really will be. Just in case.
The other thing I really appreciated was how he covered goal setting in a quick and powerful way that motivated without overcomplicating it.
He rounds out this part of the book with some solid advice on how to save for your down payment and how to decide on exactly how much of a down payment you should aim for.
Part 2: The Buy
Over the next several chapters Sean goes over every possible thing you will need to know or think about when it comes to buying a house. He is thorough, but doesn’t waste pages going into unnecessary detail.
My favourite part of this section is how he helps you get real about your needs vs. wants when it comes to buying a home and some really practical guidance on choosing a good real estate agent to work with.
Related: How to Find a Good Real Estate Agent
He’ll also shake you down a bit and make sure you really are ready to buy your own place.
The simple truth is that buying is the wrong move for many a person and can end up costing you plenty of money if you jump in before you’re ready. Even though this is a pro home ownership book - he doesn’t skirt around the issue at all.
I did have one major complaint about this section though. He spends most of the book advising against overspending, preaches risk management, and generally advises being pragmatic and not overextending yourself.
He then does an about face and both recommends using a Home Equity Line of Credit (HELOC) to go into further debt if you don’t have savings for home renovations. Worse, he says “This is a great option, one that doesn’t get the attention it deserves” about a “purchase plus improvements” mortgage with a paltry 5% down payment.
Not only is a 5% down payment going to cost you big in extra CMHC insurance and increased interest costs, but doing that could overextend you by adding to the size of your mortgage when you clearly can’t afford much already. These types of specialty mortgages also come with worse rates because they are non-standard products targeted at people who don’t have their finances in order.
I wouldn’t say it’s a “great option” - I’d say “almost always avoid.”
Finally, Chapter 10 is a must read section that covers the ins and outs of how mortgages work. It will open your eyes about the complexities and massive booby traps that can come with your mortgage. I learned a few unexpected things myself, even though I’ve researched mortgages quite extensively and read the fine print pretty closely on more than one occasion.
Part 3: Congratulations You’re A Homeowner
At this point, the book is kind of winding down and most of the pearls of wisdom have already been shared. But, you will still find some good tips on how to keep your “castle” in good running order and to make sure both it, and you, are well protected in case of emergency.
My favourite tip is one that everyone should have tattooed on their eyelids - avoid mortgage life insurance. Why would you pay for insurance coverage where your coverage actually decreases as you do something good (pay down your mortgage). That doesn’t mean the premiums are cheaper than term life insurance either.
Mortgage life insurance designates the bank as the beneficiary so your heirs will never see a penny of it. It goes straight to the bank to discharge your mortgage without any consideration of your estate at all. Pass. Get term life insurance instead.
This Book Pays For Itself
One thing is for sure, this book will pay for itself. Even if you follow 5% of the advice given by Sean, you should still be hundreds of dollars ahead of the game.
So far, readers are loving it too leaving a string of nearly all 5-star reviews on Amazon.ca. Personally, I would give it a 4-star rating because of the few minor things I mentioned already.
If he cleaned those things up in a 2nd edition, I might just bump that up to a 5-star.