Lets say that you managed to save enough to pay off your mortgage. Would you pay it off, or would you invest the money? I'm just curious as I was debating this at work and people have all sorts of opinions.
Thanks
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Lets say that you managed to save enough to pay off your mortgage. Would you pay it off, or would you invest the money? I'm just curious as I was debating this at work and people have all sorts of opinions.
Thanks
I would( and did) pay off my mortgage and then I started investing the monthly mortgage payment I no longer needed to top up my RRSP's, RESP's and TFSA's. You can see if any of these would be of benefit to you depending on your personal finances and family situation and you can invest them in guaranteed investments like GIC'S or mutual funds etc depending on your risk tolerance and investment goals. I like owning my own home mortgage free, and also when I payed it off interest rates were somewhat higher -my first goal was to get out of debt but that is just my opinion!
My opinion - pay off the mortgage.
I am somewhat risk averse - I prefer a guaranteed savings versus a potential investment income any day.
We were lucky enough that between the sale price of our last house and the shares and other investments we had ..we were able to buy our new house outright.
As lizzie says, that money we save monthly is availible for other purposes now.The only downside I can see is if there would be a penalty for cashing in the mortage before the end of the term.
It all depends on your risk tolerance. Don't invest what you can't afford to lose. In my business, I see investors make ridiculous amounts of money. . .but just about everyone suffers a bad debt/investment once in awhile. A good accountant helps you write that off.
ANother option is to start off small and work your way up into investment strategies. Always try to diversify if you do invest.
We have left ours in investments. Here is why:
1) DH is a self employed contractor. We can write off some of our mortgage interest, and most of the home expenses (20%) for his taxes.
2) The cost of closing out the mortgage added to the cost analysis of which was better for us.
3) We are getting a better return on our investments than the interest of our actual mortgage.
4) Our mortgage is crazy flexible, so it is hard to give it up!
5) We underbought as home. That is, the we bought a cheaper house than we could actually afford (thanks to DH being a contractor) so we fix it up as we go. Mortgage payments are not a stretch for us at all. (But I only have drywall finished in one room of this home!LOL!)
So, we have left everything as is until we renew our mortgage next year and see what kind of interest rate we get. Then, we will decide if we are still better off.
We underbought as home. That is, the we bought a cheaper house than we could actually affordQuote:
Originally Posted by matty's mom
GOOD FOR YOU!!!!! LOVE to hear that. WIsh so many more people would do that.
This is excellent advice...being in the 'accounting' field, paying off your mortgage, instead of investing, would only make sense if the interest on the mortgage is more than the investment interest gain. Invest the $$, and when funds permit, make the occasional 'extra' payment on the mortgage. Also, instead of paying your mortgage monthly, have it set up to pay bi-weekly or weekly (not a huge difference as far as interest for bi-wkly or wkly)....you end up paying a couple extra weeks per year, along with saving thousands of $$ on interest, and shortening the mortgage term.Quote:
Originally Posted by matty's mom
Everybody probably has a unique situation for this. I would pay off the mortgage most likely though! Then you can invest what you would normally be paying on the mortgage.
But everybodys situation is probably unique depending what your interest rate you are paying on your mortgage, you just have to do all the math!
Like if you have a big mortgage because you bought a big house...or how much you have left of your mortgage to pay off,interest rates on it,what your risk is of your investment (GIC,TFSA would probably earn peanuts VS. a successful stock investment) etc.
I think in most cases paying off your mortgage would be smarter though for a typical average income earner like myself who is rather afraid to invest my money and lose it,JMO.
I'd pay off the mortgage, on the assumption that I would be disciplined enough to put away the same amount of money every week into savings. I personally, would just feel more secure owning my home outright in the event of an illness or job loss, or even a blessing such as being able to stay at home with the future children.
So.... with the housing prices in the West that means a "deluxe" tent from CT ;) lolQuote:
Originally Posted by MortgageQueen
If we bought the house that our bank told us we could afford, we'd be struggling. We didn't need a $300K house ten years ago (we don't now either), and it will be great to have it paid off just as DS is headed for university!Quote:
Originally Posted by MortgageQueen
There is no guarantee with investment's ..unless ofcourse they are GIC's ..which pay next to nothing.Quote:
Originally Posted by emg
I would pay off the mortgage first ..as I consider it to be a debt ..always pay off the debt first & then worry about investment's :)
Great ideas guys.
But a relatively "stress-free" tent. :) I'm all for having your own home, but not if your whole life is spent paying for it. . . or what everQuote:
Originally Posted by harbie
time we have left. :)
I love the idea of simplifying. The wisest people I know have vigorously recommended it as a pre-curser to a happy life. The more you own. . .the more you worry about it.