HomehousingShould you pay down your mortgage faster?

Should you pay down your mortgage faster?




Glad we settled that debate.



  1. In my country there are no 30 year mortgages. The longest period is 10 years and the interest rate is 1.24% PER MONTH. Would you want to pay this mortgage earlier? What if I told you an early payment costs you 2% early payment penalty?

    Yes, that is the situation in my country and I am glad I never had to get a mortgage. When I bought my current residence, there was something called a Home Credit and the above rules were not in effect. I sold another property and closed that credit within a few months. When I was buying my rental property, only the above kind of mortgage was available so, I opted for a consumer credit for 36 months because I was able to pay like 70% down. Although the consumer credit was slightly more expensive, I needed the freedom to pay earlier. I hate all sorts of debt. The consumer credit was set up in three parts and I paid down the part with the highest interest rate a.s.a.p. The last two payments are due in April and May and I will be free of all consumer debt by May 6th.

  2. Where do you live that charges mortage interest by the month?! I totally understand wanting to pay it off sooner. I’m in Canada, and my rate if 3.09% per year which is pretty low…and I keep on bumping up my payments because I’d like to be rid of it sooner rather than later. I’ve got a great defined benefit pension plan at work, so it makes more sense for me to aggressively pay down my mortgage than it does to save more for retirement.

  3. I also pay my mortgage down faster – my mortgage is at 3.5% (up for renewal next year) and with my pre-payment mortgage plan I can get it paid off in 6 years. I know I could likely get an overall better return in the stock market, however my incentive is no debt and better cash flow, which will allow me to work part time and spend time at home with the kids. As a family we’re not comfortable doing this before our debt – and that cash flow obligation – is gone. Perhaps I should add that in Canada your mortgage is not tax deductable?

  4. Aren’t we all here to punch debt, any kind of debt, in the face?

    The way I see it, if you are going to end up wasting the money on other things, why not make the mortgage payment with it? If you fill your other retirement account buckets, give to the church, etc and have left over cash – then pay off the debt. Granted I have no mortgage now, but I am planning on aggressively paying it off when/if I secure one.

    • I guess that is a good point, if you have left over cash that you are just going to spend on stuff, then paying off the mortgage is pretty good as it at least will provide appreciation instead of depreciation.

      However, you’d get more return for the buck if you instead placed it in the market for the long term. Not saying that you cannot enjoy life right now if you are meeting your financial goals, but if you have cash just lying around without a purpose, it is not only more liquid in the market but you also will on average beat the house appreciation.

  5. Two years ago my 30 year mortgage was at an interest rate of 6%. In order to refinance to a 15 year at 3.5% I paid down the principal by 20K to meet certain financing requirements at a specific lending institution.

    Would do it again in a heartbeat as those funds were sitting in a bank earning next to nothing.

  6. What an insightful post Ninja!!

    It was really just a question to garner different opinions…seemingly, it has done it’s job!!!

    I personally do not choose to pay extra to the mortgage and would rather invest, but I’m always interested to hear people’s arguments for and against.


  7. I’m paying my mortgage down until I get rid of my PMI payment which will save me $288 a month. It was stupid of me to get a loan with PMI in the first place but I can’t change that. At least I can save myself that money quickly by paying down 20% over the next 4 years.

  8. Having a 30 year debt over your head is scary and frustrating. While it’s important to focus on getting rid off high interest debt first, not trying to pay down your mortgage debt can be dangerous. While you might make more money investing the cash elsewhere, you still have a debt over your head. What happens if your financial situation changes and you can no longer afford the repayments?
    Any debt that isn’t tax deductible should be paid off as quickly as possible. It’s always better to own something outright then to have to make repayments regardless of the interest. No debt means better sleep at night.
    But then again we need to find what strategy works best for us.

  9. Once you do not need the interest rate deduction, or if you need additional cash flow, it may make sense.

    Having your personal home paid off is a nice feeling…

  10. I understand the math behind the strategy of investing extra money instead of paying off mortgage but for me its a no brainer. I don’t like debt and can’t wait to own my house free and clear. I invest a good percentage of money as well but will sleep much better when I own my home.

    • As they say, finance may be math, but personal finance is mostly emotion. I too have to bow to the internal pressure of wanting to own my own home without a note. That was the main reason we went for the 15 year mortgage instead of a 30 year (the better interest rate helped as well).
      I had to “justify” it to my logical side of my brain by telling myself that our 2nd will just be starting at a higher education institution at the time. So freeing up the cash flow from mortgage payment would be more beneficial then keeping a 30-year note.

      • I did 15 year as well and although it put some pressure on our budget month to month I’m glad I did it. I blinked and I’m 9 years in with obviously only 6 to go instead of 21.

        • We got a 15 yr loan as well. The difference in monthly payments was about $300. Instead of buying a bigger, more expensive house, we chose a smaller, more affordable house so we could get a 15 yr loan. This means we’ll be mortgage free by the time we’re 40. Of course, people will say it’s not your forever house, but we could always convert this house into a rental if we move. Which means when we’re 40 we will have a semi passive income stream…. That was our thought anyways.

  11. Fund savings / retirement and pay down debt simultaneously. The degrees of which should be influenced by whether you have a guaranteed pension and whether your interest on your mortgage is tax deductable (US yes, Canada no, UK assume no, elsewhere don’t know).

    Man, you write long posts.

  12. This blog topic sucked. It looks like Ninja dedicated minimal time to his blog this go around. Either that, or he ran out of topics to write about…

  13. How ’bout to get out from under mortgage insurance–for me that’s going to be a $100-$150 a month payment that isn’t doing me any good. I plan to pay down early to get rid of PMI, but after that I agree and I’ll be loving my increased cash flow and deciding how to use it–investment in the markets, an investment property, or what..we’ll see!

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