Many people dream of paying off their mortgage in full so that they can start to enjoy a debt-free life where they don’t have to worry about making repayments every month. They even go so far as to make repayments that are above and beyond what they need to repay. But what if they were told that in doing this, they were investing poorly in their future?
This is a controversial debate and there are arguments for both sides. This blog will provide overview of the two sides of the debate to help you to decide how you should invest your money.
Evaluating your situation
Whether to repay your mortgage or whether to invest that money into another property can be decided by taking into account your specific situation. The interest on your current mortgage, the anticipated increase in value that your home is set to gain, the predicted investment return, and the value of your home currently are factors that need to be taken into consideration.
Paying off your mortgage
If you want to mitigate risk and feel more comfortable making a safe investment, it is advisable to pay off your mortgage as soon as possible. It also makes sense if you have a high interest rate on your current mortgage, or if you are in a low tax bracket.
Investing in more property
If you are 50 or younger and your interest rate is fixed, it is likely that you are making a better investment by putting your money into more property. If you have any questions about investing in property, it is a good idea to speak to a trusted legal advisor who can offer you guidance.
Source: Nerd wallet, “Invest or pay off mortgage?,” accessed Sep. 22, 2017