UPDATED: November 16, 2022

Do you currently have a mortgage? Having a dilemma on what to do with your money? 

Perhaps you’re asking, “Should I pay my house off or invest?”

I did the former, and I don’t regret it one bit. But I also understand that not everyone wants to pay their mortgage off as soon as possible.

Instinctively, you may think that using the money to invest would be the right thing to do, but here’s a bit of a secret—sometimes it isn’t

Sure, paying off your house sounds scary, but it can be easier than you think. Through my experiences, alongside facts and resources, I will tell you how to do it and which choice is likely better for you. 

This article will cover:

  • The benefits of paying off your mortgage
  • Why those benefits maybe aren’t so great
  • The pros and cons of investing your money and, the myths and misconceptions of paying off a mortgage vs. investing money.

What are the benefits of paying off your house?

The number one benefit of paying off your house is the freedom. 

It doesn’t compare to anything else in this world. No one owns you. You don’t owe anyone. 

The bank no longer has a grip on me, and it’s wonderful.

Once you pay your mortgage, your house is completely yours.

Not having to worry about monthly house payments allows me to focus on saving up. In fact, in my first year of having no mortgage payments, my wife and I saved up over $90,000! It seems unreal, but when you have no payments of any kind, that level of savings is possible. 

Today, I can focus on other expenses, such as decorating my house the way I want or putting money towards my emergency fund. Home genuinely feels like home.

Paying off your mortgage also comes with safety and a lot less risk. If I were to invest my money rather than pay off my mortgage, I would be facing a significantly higher amount of stress and uncertainty. Knowing that I don’t have to worry about making large payments on time to have a roof over my head brings me a lot of ease.

In addition to being financially at peace, I am also mentally at peace.

My wife and I don’t speak about money that much at all. If one of us crashes a car, we don’t fight or panic. We have an emergency fund for stuff like that. And, since we have no debt, we can restock that emergency fund in a hurry before the next one rears its ugly head. 

When disaster strikes, we simply pay what is needed to be paid and move on. It’s amazingly liberating and simply can’t be compared to anything else.

The Challenges, But They’re Worth It 

I believe I am a lot more financially flexible now than ever. But I admittedly had to sacrifice a lot to get to this point. My mental health was properly tested throughout the 11 months that I spent paying off my mortgage. 

  • I lived on nearly nothing 
  • I sold all my belongings 
  • And, I took on any extra job and side hustle I possibly could (e.g., I even mowed lawns for money). 

This did take a toll on me, even though I was very determined to get rid of all of my debt ASAP. I knew what my goal was, I knew what I wanted to achieve, and I knew that once I achieved it I would be a lot better off. But getting to that point is not for the faint of heart! 

I chose not to add any financial flexibility to my lifestyle, and temporarily sacrificed my mental health in the process.

Living in such an extremely frugal way can also take a toll on your social life. Since you won’t be going out, some would consider this to be ‘losing out on your youth’. It sucks, and FOMO (Fear Of Missing Out) hurts too. No trips, no concerts, no nothing. Just free picnics in the park and super-cheap frills here and there. 

But there’s light at the end of the tunnel (i.e. You’ll be a lot more free afterward). And you’ll be set for longer in life rather than focusing on a “YOLO” mindset. 

If you already have debt other than your mortgage, it can get even more difficult. I strongly advise using debt management methods, as they are very beginner-friendly and genuinely can change lives. If you’re thinking about hard-charging your debt, I’d suggest tools like the Debt Snowball and Debt Avalanche.

What If I Invested Instead of Paying Off The Mortgage? 

Did you know that if you have a $300,000 mortgage at 5% interest with 30 years, you’ll end up paying nearly $280,000 in interest alone

That number sounds scary without context, but let’s look at the whole picture. We are looking at $280,000 stretched for 30 years. That’s less than $10,000 a year. And remember, my wife and I saved over $90,000 in one year alone… so the interest isn’t honestly as scary as it sounds. 

Also, don’t forget that inflation increases over the years, which means the value of money goes down significantly, making the interest even less scary. This is all alongside the fact that real estate value is also going up, meaning that by the time your mortgage is paid, the house is likely to exceed the value of your credit and be worth much more than you think. 

All this to say, for all of you that would rather not pay off your mortgage and invest instead, it’s not the worst decision in the world. It’s just your personal preference, and that’s totally fine. It’s likely not going to kill you financially.

Want to calculate your mortgage, the interest, and your potential payoff? This easy mortgage calculator can help.

Okay, cool! But what about the downsides of investing?

So is investing better than paying your mortgage off? 

Yes and no. 

You really have to put your mind into paying off your mortgage ASAP if you want to follow in my footsteps. 

This means:

  • extra jobs, 
  • side hustles, 
  • or cutting off spending. 

In doing so, you’d be paying your mortgage off extremely fast, like, 5 years fast. If you have the drive and mindset, then yes, it is most definitely more worthwhile for you to pay off your mortgage, financially and emotionally speaking. 

However, taking on extra hours and living on significantly less is not for everyone, in which case, investing your money may be a lot more worthwhile.

You really have to take into account the fact that you’ll be really deep in debt if you invest in your primary property (or multiple properties if you’re looking to invest), and a lot of risks come with that.  

  • What if the economy tanks? 
  • What about job stability? 

Property is expensive, and while it may look good on paper, it can very easily turn into a disaster. 

Besides, if you have your mortgage paid off, you are able to save money a lot faster. Speaking from experience, I bought a rental house—fully in cash—just a couple of years after paying off my house!

The Bottom Line

It all depends on your mindset. But I really do stand by what I said. Paying off your mortgage ASAP can set you up for life and give you an incredible state of mind. No stress, you own what you own, and no one owns you. 

What’s more important to you? Paying off your mortgage and being totally debt free? Or living a life that’s like everyone else—in debt, and pretty much living paycheck-to-paycheck?

Bio: Derek Sall is the founder of LifeAndMyFinances.com, a personal finance website that aims to help people get out of debt, save money, and become rich!