It’s tempting to pay off your mortgage early if you have money lying around. You’ll feel great once it’s gone for good, but you might regret it afterward. There are a lot more negatives than positives, which surprises people.
Let’s look at some reasons why it’s a terrible idea before you do something silly. You’ll be able to do some cool things with your money instead of throwing it away. You can pay off your mortgage if you don’t like any of them.
1. Investing In The Stock Market
Would you ever invest in the stock market instead of paying more towards your mortgage? It sounds like a terrible idea unless you know how the stock market works. The average return in the stock market is great over 10 years.
If you invest that money into paying off your mortgage early, you’ll walk away with less money. Do you really want peace of mind more than getting richer? Put your money into a fund that tracks the S&P 500 if you want to be safe.
2. Starting Your Own Business
Cody Krieser, mortgage broker in Toronto, says he speaks to many customers that start their own businesses. People regret paying off mortgages early because they would rather have money to invest in marketing.
Entrepreneurs find ways to get massive returns from their businesses. Imagine making $5 for every $1 you spend on Facebook or Google ads. Even if your property skyrockets in value, you’ll never make the same kinds of returns.
3. Studying For A Better Career
Will your hourly wage increase if you go back to school? We already know graduates earn roughly $1.5 million more than non-graduates over their lifetime, so you’ll probably earn lots more if you switch careers.
You will need savings to get through college without taking out more loans, so don’t pay more towards your mortgage before going back to school. Move money into a secret account if you want to study in the future.
4. Grow Your Real Estate Empire
It’s easy to get addicted to real estate because it’s so much fun. If you want to start investing in other properties, you’ll need extra money. People who build real estate empires use mortgages to pay for their homes.
Speak to a broker to find out more because second home mortgages are slightly different. You won’t lose any money if your properties have a high occupancy rate, and once the mortgages are paid off you’ll be pretty rich.
5. Treat Yourself To Nice Things
It’s okay locking yourself away in your room while saving for a mortgage down payment, but it’s only a short-term strategy. Don’t pay off your mortgage early if it means spending a decade watching TV while people your age have fun.
Owning your home outright is not worth falling into a depression. Feel free to treat yourself instead of putting extra towards your monthly payments. You won’t look back with any regrets when lying on your deathbed.
Open A New Savings Account
Don’t put extra money towards your mortgage unless you’re 100% sure it’s the best way forward for you. If you start putting everything into a new savings account, it will be available if you change your mind.