How to Live Mortgage Free: 10 Best Ways To Pay Off Your Mortgage

Who will not get stressed with a mortgage looming every month? Making the payments would be easier if you have a regular job, but what about when funds are low? Debts are such a challenge for anyone in this day and age, wouldn’t it be great to know how to live mortgage free?

A mortgage has been a burden for many families in these times of continuously growing inflation. The current average interest rate for a 30-year plan is 5.71%, which means you will have to pay a yearly interest and principal of $9,043 for a $100,000 housing loan. 

Paying off the last installment of your mortgage with a house 100% yours would certainly be a relief and an accomplishment. For those who want to avoid being burdened with a monthly mortgage, there are several ways to pay it. 

Check out these options if they suit your circumstances, budgeting methods, and preferences, and learn how to pay off your mortgage better.

10 Ways To Live Mortgage Free 

1. Move Your Way Up Gradually

Living in a luxurious 5-bedroom, 5-bathroom house would require heavy monthly mortgage payments. It is better to buy a house you can afford while keeping some cash reserves back for future use. 

As you improve your financial situation, move to bigger houses and gradually improve your lifestyle. This strategy will allow you to afford the big house of your dreams at the cost of some years of patience, but the biggest benefit will be living without a mortgage which can save you money. 

2. Build Your Own House

Many people nowadays prefer building their own homes to save money. It isn’t easy, but it is possible. Some companies, such as The Sears Catalog, sell kit homes for people to assemble themselves. 

Half the cost goes into building construction expenses, so if you can do it yourself, the savings will not put you in the red. Make sure that you hire professionals for jobs such as electric wiring and plumbing, as some local codes require licensed professionals to do such jobs.

3. Offer Rooms for Rent

If you have already bought a house on a mortgage, you can offer rooms for rent to pay your monthly payments to become mortgage-free. 

Putting rooms up for rent might affect your private space, but for some, it is worth it in the long term, considering you will be mortgage free much sooner than expected. 

It’s a great way to pay your mortgage without affecting your monthly income.

If you have a 15-year mortgage plan, taking in more roommates can help you get mortgage free quickly without paying anything. Financially, it’s a good way of getting out of your mortgage headaches in the long run.

4. Live in a Tiny House

As tiny houses are much cheaper than traditional homes, living in a tiny house will enable you to live mortgage free. 

The average cost of a small house ranges between $30,000 to $60,000. However, if that’s still too much, there are tiny houses with costs as low as $8,000. The cost of the house depends upon the amenities you choose to include. Fewer amenities mean mortgage payments can be easier and faster.  Low cost means low interest, right?

Another cost-saving method is to build the tiny house yourself instead of buying it prebuilt from the market. It is one of the most cost-effective ways of living mortgage free.

5. Buy a Duplex or Triplex

A duplex or triplex is a home divided into 2 or 3 residences. These non-detached homes are much cheaper to build than 2 or 3 conventional houses, reducing the costs. The average cost per square foot of a 1-story duplex is around $110 to $180; you will pay half the price if you want to buy 1 duplex unit. 

Moreover, if you buy a duplex or a triplex, you can rent out the other units to help cover the cost of your mortgage. 

Couple Man and Woman Sitting on Couch in Living Room Home House with Air Conditioning MSN
Image Credit: AllaSerebrina/Depositphotos.

6. Live in States With a Low Cost of Living

The cost of living varies from state to state in the US. Real estate prices are quite high if you live in areas such as New York and Washington. 

However, living would be much cheaper if you lived in states such as Tennessee, Kentucky, or Indiana. Mortgage rates here are so much lower than in those bigger states.

While moving to a lower-cost-of-living state is a very big life decision, perhaps you live near another state that offers cheaper real estate. That would mean living in a place with a lower mortgage while you can still maintain the life you have.

7. Start a Side Hustle.

Starting a side hustle would require investing extra working hours, but it would quickly free you from your mortgage. The income generated from side hustles can cover the monthly payments or pay your mortgage quicker. These side hustles will really help you with those debt payments in the long run.

Here are some of the best side hustles you can do to cover your mortgage expense:

8. Find Good House Deals in the Market

It is the strategy most investors use for quick profits; find homes that require a lot of repairs and fixing. 

The owners of these houses usually want to get rid of their houses to escape any repairing and fixing issues. You can buy these inexpensive homes and spend a little extra cash from your reserves to turn them into your dream house.

Just be aware that turning those houses into your dream home will take some time and effort, perhaps also a monetary investment.

9. Sell Unused or Unwanted Home Items

You can increase your mortgage payments if you have other sources of income, such as sales from used or unwanted items from your home. 

It’ll also benefit from decluttering your home while paying off your mortgage faster. 

10. Consider a Rent-to-Own Option

Instead of a mortgage or a leasing contract, explore rent-to-own options, which means any rent payments you make go towards a down payment for a house. 

Opting for a rent-to-own arrangement means not signing a contract that promises to purchase the home. 

11. Live Out of the Country

Some countries have lower living costs, including home rentals, which could be an excellent temporary option for reducing expenses and saving money for your future home. 

Advantages of Not Living Mortgage Free

A mortgage may seem like a long-term burden on your shoulders at first glance, but it isn’t. This section will discuss all the positives of having a mortgage.

Getting Your Own Home Without Cash

Purchasing your own house has become quite difficult in this world of rising inflation. The mortgage allows you to purchase a home without cash in hand

Real estate value generally increases with time, which sometimes balances the amount of interest paid in the long term. If things go perfectly, not only will you be able to own a house but also make a profit from it. 

Living Room in House Home with Couch and Barstool and Ceiling Fan MSN
Image Credit: iriana88w/Depositphotos.

Keeps You Motivated to Earn More

Goals and ambitions keep you motivated. Trying to reach the target allows progression. 

Having no specific goals or targets to achieve will demotivate you, which is what happened to a 26-year-old millionaire who regretted paying his mortgage early. Without the mortgage, the fire inside him that motivated him to earn more also vanished. 

Having a mortgage improves your ability to take calculated risks. 

Enjoy Tax-Deductible Interest

The interests on your mortgage are tax deductible only on your first and second mortgages. That means when you pay interest on your mortgage, you can get a part back through your taxes.

However, you cannot deduct interest payments if your mortgage debt exceeds $1,000,000. The limit also reduces to $500,000 if you are married but filing separately. 

Have More Cash on Hand

Some people use all their cash reserves to buy a home, making it difficult to get immediate cash if struck by any unforeseen circumstance. 

It is better to pay for your home every month to complete the purchase over the years rather than making a complete payment at once. 

Disadvantages of Not Living Mortgage Free

The disadvantages of having a mortgage overshadow its advantages. 

Here are the 5 biggest disadvantages of having a mortgage:

More Stress

Stress can make your life difficult. A mortgage might give you the experience of owning your own house, but that satisfaction goes away as soon as you start looking for the money to pay your first monthly payment. 

While it’s hopefully not a problem on a day-to-day basis to pay your mortgage, it can be a problem when other unexpected costs hit. Paying your mortgage could become a stressor, which it shouldn’t, and paying off your mortgage quicker when possible would be the solution here. 

Less or No Savings

Regardless of the number of years you choose for the mortgage, your monthly payments will eat away at your income. If you live mortgage free, you can save thousands of dollars and increase your cash reserves, which can help you in your financial goals. 

No savings can also leave you helpless, having no emergency fund to be used against unforeseen circumstances such as medical conditions or job loss, which means you have less room to breathe when you have a mortgage.

Repossession 

When the homeowner fails to pay the mortgage balance, repossession usually follows. In this case, you must speak with your lending banks and renegotiate the terms; otherwise, you may lose your home.

Interest Rate Hikes

Interest rate hikes mean higher mortgage loan costs, thus increasing your monthly payments. It can also affect the overall demand for your house, making it more difficult to find buyers. 

Less Money for Other Investments

Mortgage payments will cause you to say goodbye to other sources of building wealth, such as short-term investments or investing in index funds

While you can still invest, most of your monthly income will go to your mortgage. When you pay off your mortgage and live mortgage free, you’ll have more room in your budget to increase your net worth further.

More Time To Financial Freedom

Having a mortgage will keep you tied to your job since you won’t be able to take any risks to improve your financial situation. Considering you have a mortgage, leaving your job would involve high risks that many people consider unnecessary. 

While you can still make it work, it will take more time and energy before you can leap. Many working toward FIRE (Financial Independence and Retire Early) work to pay off their mortgages and build up their investments over time.

House with a lawn and trees MSN.
Image Credit: iriana88w/DepositPhotos.

Frequently Asked Questions (FAQs) – How to Live Mortgage Free

Is it Better to Pay off the House or Invest my Money?

Paying off your mortgage and investing both have their pros and cons. While the average stock market return is still higher than the current mortgage rate, it doesn’t only involve monetary benefits. 

What Are the Pros and Cons of Paying Off Your House?

One of the pros of an early mortgage payment is that it guarantees a risk-free return. It would open more investment options for you once you are mortgage free. 

On the other hand, if we look at its cons, the biggest disadvantage is the immediate requirement of cash, making the budget too tight for some other investments. 

What Is the Average Age to Pay Off the Mortgage?

The average age borrowers expect to pay their mortgage is 59. The most common mortgage term US citizens apply for is 30 years, meaning most people apply for a mortgage at 29. 

Most experts believe you should plan to pay off your mortgage by age 45.

Conclusion – How to Live Mortgage Free 

Living mortgage free with any (or a few) options listed here is possible. You need a solid plan and strategy depending on your circumstances, finances, and goals. 

Having your own home this way may be different from how people usually approach home ownership, but ultimately, it’s your life and your choice to live stress- and mortgage-free.

Related reads: