Finally, Now you realize the actual importance of money management..
Yes; based on the info you mentioned, I don't see any reason to panic & rush to pay down a 2.25% mortgage (I know this forum is loaded with guys who are frugal & want to be debt free; & I have no problem with that; but every situation & every individual is different; so we cannot generalize all of them as one)..
To sum up your above description: this is where you stand:
a. You income is stable.. (so your present is taken care off)
b. You have a generous retirement plan.. (so your future is also taken care off)
c. You are already making double payment.. (although there is no need to do this; but I can understand you want to be mortgage debt free early).
d. You also pay extra 10% towards your principal (although its not needed, but you have done it in the past)
&
e. No RRSP contribution (means who are not getting the tax benefit upto the allowable limit from CRA)..
Now, consider these probabilities:
1. The biggest risk you have is all your assets are in the housing basket (what if the housing market crashes & major portion of your equity is gone?)
2. Your employer goes into trouble & your job gets into jeopardy making your stable source of income unstable..
3. A sickness or accident makes you incapable of earning your true potential
4. there are several other factors; which I don't want to mention here..
Lets put it this way: By adding into your mortgage; you are saving 2.25% on the money; but this money what you are paying extra towards your mortgage is after tax money. It means, from your gross income there is income tax deduction, & then you get your net income; & you use your net income to pay towards your mortgage.
What if you pay the same extra amount (double up & 10% both) towards an RRSP account; an receive a substantial tax deduction from your income tax. This will give you a tax refund; & then use the tax refund to pay down extra towards the mortgage. This way your hitting 3 targets with one bullet.
a. Paying down mortgage
b. Saving on taxes, which wasn't happening before.
c. Having an RRSP account which means you are house rich & cash rich (both at the same time; without costing an extra dime)..
Now for your RRSP account; you don't have to aggressive and buy penny stock/junk bonds/etc. & try to hit home run every year........ rather, all you need to do is allocate the RRSP account money into a conservative built-in portfolio allocation where the risk is negligible & even in a downturn, you make more than 2.25% the interest you pay on your mortgage..
This way you have both money in the account (RRSP) & the house which will become mortgage free eventually (what's the hurry) if the Canadian housing collapses in the future, you still have your RRSP.
Over a couple of years, your RRSP account will outgrow much faster & in your golden years it will be more than the value of your house..
You will end up having 2 assets a debt free home & an RRSP account
(CASH RICH & HOUSE RICH)
I am a licensed financial planner (If you have any specific questions you may ask here or via PM)
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