Comments on: Repay HBP or pay down mortgage? http://www.moneysmartsblog.com/repay-hbp-or-pay-down-mortgage/ Investing and Personal Finance Fri, 10 Sep 2010 18:15:57 +0000 hourly 1 http://wordpress.org/?v=3.0.1 By: FourPillars http://www.moneysmartsblog.com/repay-hbp-or-pay-down-mortgage/comment-page-1/#comment-369 FourPillars Thu, 26 Jul 2007 19:07:58 +0000 http://www.moneysmartsblog.com/repay-hbp-or-pay-down-mortgage/#comment-369 MG - thanks for the comment. I'm definitely in the category of people who would sleep better if I had less mortgage to worry about. Call me crazy but that's the way I am. This might also be a function of the ratio of your mortgage to your gross salary. If my mortgage was equal to my gross salary then I would feel a lot better than if the ratio was 2:1 or 3:1! Age might also be a factor - If you are 45 and hoping to retire at 55 then the mortgage might be seen as a big impediment to early retirement. Someone who is younger might not worry about it so much because they have more time before retirement. I guess different scenarios might result in different strategies. Mike MG – thanks for the comment.

I’m definitely in the category of people who would sleep better if I had less mortgage to worry about. Call me crazy but that’s the way I am.

This might also be a function of the ratio of your mortgage to your gross salary. If my mortgage was equal to my gross salary then I would feel a lot better than if the ratio was 2:1 or 3:1! Age might also be a factor – If you are 45 and hoping to retire at 55 then the mortgage might be seen as a big impediment to early retirement. Someone who is younger might not worry about it so much because they have more time before retirement.

I guess different scenarios might result in different strategies.

Mike

]]> By: moneygardener http://www.moneysmartsblog.com/repay-hbp-or-pay-down-mortgage/comment-page-1/#comment-367 moneygardener Thu, 26 Jul 2007 16:51:59 +0000 http://www.moneysmartsblog.com/repay-hbp-or-pay-down-mortgage/#comment-367 I gues that should read 'such a large amount of money' I gues that should read ‘such a large amount of money’

]]> By: moneygardener http://www.moneysmartsblog.com/repay-hbp-or-pay-down-mortgage/comment-page-1/#comment-366 moneygardener Thu, 26 Jul 2007 16:51:06 +0000 http://www.moneysmartsblog.com/repay-hbp-or-pay-down-mortgage/#comment-366 The impact of coumpounding interest on debt is lessened with each dollar of principle that you pay back. Similar to the way that compounding works for you with each dollar that you invest. I agree with FB on his other points. Especially on the point he made below: I think that most people will try to pay off their mortgage ASAP simply because they do not sleep well at night thinking they owe such amount of money The impact of coumpounding interest on debt is lessened with each dollar of principle that you pay back. Similar to the way that compounding works for you with each dollar that you invest. I agree with FB on his other points. Especially on the point he made below:

I think that most people will try to pay off their mortgage ASAP simply because they do not sleep well at night thinking they owe such amount of money

]]> By: FourPillars http://www.moneysmartsblog.com/repay-hbp-or-pay-down-mortgage/comment-page-1/#comment-365 FourPillars Thu, 26 Jul 2007 12:33:28 +0000 http://www.moneysmartsblog.com/repay-hbp-or-pay-down-mortgage/#comment-365 Thanks for the comment FB - I can't argue with your assumptions since I can't predict the future. One point though is that with mortgages - the "long run" doesn't neccessarily apply. The closer you are to paying off the mortgage, then the less confidence you can have that equities will outperform the mortgage rate. Also - I believe interest does compound on debt so compounding works the exact same way as it does on savings. Mike Thanks for the comment FB – I can’t argue with your assumptions since I can’t predict the future.

One point though is that with mortgages – the “long run” doesn’t neccessarily apply. The closer you are to paying off the mortgage, then the less confidence you can have that equities will outperform the mortgage rate.

Also – I believe interest does compound on debt so compounding works the exact same way as it does on savings.

Mike

]]> By: TheFinancialBlogger http://www.moneysmartsblog.com/repay-hbp-or-pay-down-mortgage/comment-page-1/#comment-363 TheFinancialBlogger Thu, 26 Jul 2007 10:27:04 +0000 http://www.moneysmartsblog.com/repay-hbp-or-pay-down-mortgage/#comment-363 In the long run, I am sure that your investment will beat the 5% rate your a paying on your mortgage. Not only that but the money that you put back in your RRSP will benefit from compounding interest. There is no such things on a debt. I think that most people will try to pay off their mortgage ASAP simply because they do not sleep well at night thinking they owe such amount of money. However, I do not think that people should be in a hurry to pay off their mortgage. It will always be a low interest debt. Therefore, there is always something else to do with your money that will be me profitable than paying off a 5% debt. Cheers, FB. In the long run, I am sure that your investment will beat the 5% rate your a paying on your mortgage. Not only that but the money that you put back in your RRSP will benefit from compounding interest. There is no such things on a debt. I think that most people will try to pay off their mortgage ASAP simply because they do not sleep well at night thinking they owe such amount of money.

However, I do not think that people should be in a hurry to pay off their mortgage. It will always be a low interest debt. Therefore, there is always something else to do with your money that will be me profitable than paying off a 5% debt.

Cheers,
FB.

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