Keeping My Mortgage Debt
I was talking with a friend about my mortgage the other day.
For context:
- I owe about $170,000
- My mortgage rate is 1.99%
His opinion? Pay it off as fast as possible and be debt-free.
My opinion? That's one debt I'd be in no rush to eliminate.
If I'm borrowing money at 1.99% while inflation averages around 3% over the long run, that debt is effectively becoming cheaper in real terms every year.
Even when I renew next year and my rate is likely closer to 4%, I still don't think it makes sense to aggressively pay it off. I'd rather invest the difference and let compounding work for me over the long term.
Being debt-free feels great emotionally, and I completely understand why some people prioritize it.
But financially? A low-rate mortgage is often one of the cheapest forms of leverage you'll ever have.
I'd rather have my money invested in assets that have historically generated much higher long-term returns than rush to eliminate a mortgage. I am also looking at the Smith Manuver and potentially implementing that strategy.
Something I have done though is instead of putting extra towards the mortgage I actually created a separate non registered account and buy around $1300 worth of $XEQT each month and its designated for mortgage for the future and has been growing at a way faster pace tha my mortgage interest.
If you had a mortgage at 1.99% today—or even around 4%—would you:
- Pay it off as fast as possible?
- Or invest the difference?
