KLE 62: When Should You Pay Off Your Mortgage?

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  • September 6, 2010

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Q: When should you pay off your mortgage?

A: When the bank tells you to.

That’s the simple answer!

But, you need to understand why you might be asking that question: is it because you expect to feel a stronger sense of ‘security’ when your home is paid off? That seems to be the common expectation, and is a position widely adopted in the popular financial press i.e. pay off your mortgage early.

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Now, isn’t that interesting?

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September 6th, 2010
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Comment Number:
1
Written by:
dustbusterz
Posted on:
November 21, 2010 at 6:09 pm

yes that is interesting,but can’t you do better using the equity in your home from time to time,to make other investments?I.E buying or starting a business, and investing in real estate? also,if your going to pay your mortgage off over 25 to 30 years, and use the equity,when is the right time to pay of that loan? or do you?

Comment Number:
2
Written by:
AJC
Posted on:
November 21, 2010 at 9:59 pm

@ Steve – if you wait the 15 to 30 years for the typical mortgage to run its course, it will most likely be paid off in the P&I repayment that they ‘conveniently’ work out for you … or, in a ‘balloon’ at the end.

Chances are, though, that you will reach your Number well before then (see Module 4 for what to do with your remaining loans once you reach your Number, and Module 3 for what to do with the ‘spare equity’ that you hold in your house while you are still trying to reach your Number).