Skip coffee to reduce your mortgage

Own Your Life ~ by Jessi Johnson

What if you could shave off years of your mortgage amortization, save over $40,000 in interest, and even benefit from tax-saving strategies—all by giving up just one coffee a day?
It might sound too simple to be true, but let’s take a look at the numbers…they speak for themselves. Let’s take a $1,000,000 mortgage with 25 years left to pay and an interest rate of 5%. The monthly payment for this mortgage would be approximately $5,846. Now, imagine that your daily coffee habit costs $5 a day. By redirecting that $5 toward your mortgage, you could reduce your repayment term from 25 years to 23 years and 10 months.
Just over a year might not sound like a lot of time, but the interest savings are substantial, you’d save over $41,000 in interest over the life of your mortgage. But what if you doubled that $5/day to $10/day?
Let’s explore how much further you could go.
Let’s stick with the $1,000,000 mortgage example, with 25 years left to pay and an interest rate of 5%. The monthly payment is approximately $5,846. If you redirected $10/day—the equivalent of skipping two starbucks coffees or another small expense—you could reduce your mortgage term even further, down to 22 years and 8 months. The interest savings? A substantial $78,986 over the life of your mortgage.
Now here are 2 ways you can put these strategies into use.
1. Use Prepayment Privileges
Many lenders offer prepayment privileges that allow you to increase your regular mortgage payments.
You’ll have to take a look at your mortgage contract to see which pre-payment privileges but most mortgages allow you to increase your payment to a certain percentage.
Take advantage of these by notifying your lender of the desired payment increase, it’s as easy as that.
This option is convenient because it’s automatic. Once set up, you don’t have to think about it—it just works in the background, helping you pay off your mortgage faster.
2. Make Lump-Sum Payments
Another option is to make a lump sum payment. Let’s say you get a bonus at the end of the year or you save up money throughout the year and have additional savings. You could throw this sum at your mortgage, but just make sure to check your mortgage contract to determine the amount you’re allowed to put down as a lump sum.
Another advantage is that when you put extra money toward your mortgage, you’re effectively earning a guaranteed return by reducing the amount of interest you’ll pay. And this return is completely tax-free.
For example, if you invest that same $5/day elsewhere outside of a TFSA or RRSP , your returns could be subject to taxes. But with mortgage prepayments, every dollar goes directly toward reducing your debt, making it a smart financial strategy.
Are you ready to take control of your mortgage and explore how prepayment strategies can help you save thousands and pay off your home faster?
Every situation is unique, and I’m here to guide you through the options that work best for you.
Book a call with me today, and let’s create a personalized plan to maximize your mortgage savings.
Whether it’s leveraging prepayment privileges, setting up lump-sum payments, or finding creative ways to redirect daily savings, I’ll help you make it simple and effective.
That's all for now. Call me anytime with your skill-testing questions.
Book a time to have a confidential conversation with me here: https://calendly.com/jessirealestate/phone-meeting
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