Should you pay off your mortgage?

Interest rates are low and many homeowners (me included) are looking at these rates and trying to make plans. I dream of the day I can pay off the mortgage. Like many homeowners, I am struggling with the question of whether to retire my mortgage early or not. I thought I would review some of the pros and cons with you to help with your decision.

The pros:

  • Paying off the home loan could save tens of thousands of dollars in interest during the time you would otherwise be making payments.
  • Peace of mind you will have from owning your home free and clear.
  • Most experts recommend owning your home free and clear before you retire.
  • If you still have a higher interest mortgage, paying down your principle will make refinancing easier.

The cons:

  • Sometimes, other financial needs should come first: Max out your RRSP contributions. Pay off credit cards. Create a 6-month emergency cash fund.
  • Mortgages are cheap money. When you pay down your mortgage or pay more every month, you are probably hoping for those big dollar savings on interest. But remember these are future dollars and they will be worth less 20 years from now. You may want to keep your higher value dollar today and pay the bank its lower value dollar in the future.
  • If you plan to move to another city or trade up or down, it’s not wise to pay off the mortgage. You would tie up your money in a home you might not be able to sell very soon when you want to buy another one.
  • Check to see if the investment you could make with the payoff money would earn more interest than what you are presently paying on your home loan.

The conclusion:

If paying off the mortgage would give you great satisfaction and a sense of security, go ahead and do it. But, don’t make yourself “house poor” or risk other parts of your financial health to do it.

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Michele R.J. Allinotte is the owner of Allinotte Law Office in Cornwall, Ontario and she helps her clients make the best decisions for themselves, their families and their businesses. Her practice focuses on the areas of business law, estate planning and real estate. Visit to get her FREE Peace of Mind Personal Inventory to make sure that your family has all the information they need.