this post was submitted on 08 Jul 2023
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Personal Finance

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Are there any disadvantages to paying off your mortgage? Can you always just get another mortgage later on, or doesn’t it work that way? This is in Canada, where mortgage interest is not tax deductibl (kbin.social)
submitted 1 year ago by [email protected] to c/[email protected]
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Are there any disadvantages to paying off your mortgage? Can you always just get another mortgage later on, or doesn’t it work that way? This is in Canada, where mortgage interest is not tax deductible.

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[–] [email protected] 1 points 1 year ago

@Algeerto

  1. if you have other loans, then obviously you should pay the highest interest loans off first. Usually the mortgage would have the lowest APR of all your debts and thus should be paid off last.

  2. if the interest you pay on the mortgage is less than the interest and dividends that you would earn on the money you would otherwise pay the loan off with, then it's a bad move. I know someone who bought a new car and was able to buy it outright. But the low interest loan that was offered by the dealer as an incentive was so low that it actually made sense for her to take the car loan and invest her money, which is what she did. Usually it’s the other way around (people get burnt by having savings and debts at the same time), but not always.