Is Paying Off Your House Worth It? Discover The Financial Benefits

Estimated reading time: 14 minutes

Discover the financial benefits of paying off your house. Is it worth it to prioritize debt freedom over other investments?

We chose to pay off our mortgage as the first option, as the debt freedom outweighed the investment risks.

To Invest Or Pay Off Mortgage First

The thousands of dollars in savings alone is a good reason to choose a pay-off house option first. 

However, homeowners should at least consider other perks with this financial freedom.

Sometimes, I think we played a game of how fast we can pay off our house from when our mortgage clock hit go.

There is never a reason to stay in debt as you don’t gain anything from it other than more interest debt on top of debt.

Pay off the most significant debt you will ever owe vs. gambling the money on investments.

Which do you choose?

This is why we decided to escape the mortgage rat race as fast as possible.

How To Pay Off House Early

Even though we put a 25% downpayment on the house, we were looking at the amortization schedule, which set bells off.

Related: Becoming a single homeowner- property/downpayment

Who wants to pay a mortgage for 15, 20 or even 30 years?

That’s a long time for any homeowner but a reality for many, although there are ways to shave time if you want to.

Read your mortgage agreement to see if there are ways they permit you to pay your mortgage faster. 

Ideally, understanding all of this BEFORE you sign for a mortgage is the right way to go about homeownership.

• Increasing the amount you pay
• Extra Mortgage Payments
• Lump-sum Mortgage Payments
• Weekly or Bi-weekly Mortgage Payments

Frugal Living All The Way

I’m still in awe that we paid off our $265,000 mortgage in only five years, even with the ups and downs we faced.

That took some financial dedication and relationship goals to win the debt-freedom race on both sides.

I had never set out to own a mortgage-free house by age 40, but it happened.

The more complicated part begins but is not impossible when you become parents as expenses seem to creep up that you never had before.

Everything from disposable diapers to clothes and school supplies, money for this, and money for that.

It all adds up and is an extra budget expense that should be expected when you become a parent.

Even so, we kept on being frugal, buying second-hand for our son and picking up free items that were being donated.

Let’s not forget the $208.33 monthly for one child to max out his Registered Education Savings Plan.

Pay Off the House Or Invest

Life after the mortgage is paid off drastically changes for the average family who relies on a financial advisor to invest and monitor retirement savings.

We are part of that family of investors since we don’t risk investing in our Registered Retirement Savings Plan, Tax-Free Savings Account, and other non-registered investment accounts.

There’s that fine line between confidence in investing and understanding the benefits of paying off debt.

We lean more towards frugal living and understand that debt freedom goes a long way for families who want it all to disappear.

Since I moved to Canada and was allowed to contribute to my RRSP and TFSA, I jumped but still had to educate myself.

I never maxed out my retirement savings until we had a paid-off house only because my wife lost her job months into buying the house.

That didn’t scare us much, as we purchased our home on one income.

However, our investments suffered as we had to scale back until I got a raise and a second career opportunity.

Even today, I am limited in retirement investing as I have a defined benefits plan with my employer.

Investing First Instead Of Mortgage Freedom

Others may have a different view and would invest their money instead of getting mortgage freedom party invites ready for their friends and family.

We didn’t have a bonfire with our beloved mortgage documents, but we did breathe a sigh of relief, which is something we won’t do with investing.

Why? Well, anything could happen.

As we all know, investing comes with risk, even if historical data dictate otherwise.

Do you remember the 2008/2009 stock market crash?

That was enough for Mrs CBB to put her investing mindset on reserve while still investing, as she lost quite a bit in her RRSP.

It has since recouped, but she lost years of investment opportunities trying to climb back up to the top.

It can be painful for someone without a high-risk tolerance for a potentially volatile market, even if it will rebound.

Not everyone handles it well, especially if you are not a confident investor.

6 Key Benefits To Pay Off House Early

Below are the key benefits that we felt encouraged us to keep saving, earning extra money (all those $100 cash focus groups mattered), and investing in our future retirement and healthcare.

1. Debt Freedom

We did NOT want to retire with debt, nor did we want to suffer at the hands of the Canadian government if we needed long-term care or healthcare above what is offered.

We now strive for the best possible retirement scenario because we have been forced at a young age to see what happens when you can no longer live alone.

Debt freedom also allows us to do more with our son in terms of sports, holidays, and not worrying about if we miss a day of work.

2. Financial Freedom

In our eyes, if we wanted financial freedom, we needed to retire all debt and save cash for the things we needed, so that’s what we did.

The last thing you want is to carry debt, especially mortgage debt, into your retirement years when income levels are at their lowest.

Even if you do pay your house off in total, there are expenses a homeowner must continue to pay, such as property taxes, utilities, groceries, etc.

Having financial flexibility without a large mortgage payment looming over your shoulders can break down barriers for anyone at any age.

3. Stress Relief

Anyone who tells you they have debt and no stress is full of it.

Owing money with the potential to lose your job, become injured, or need round-the-clock care is nothing to put on the back burner.

Money stress is natural whether someone has a small debt, student loans, credit card debt, car loans, or one of the most significant debts, a mortgage.

One by one, as you get rid of your debt, you’ll feel the weight of owing someone money fall away from you.

There’s nothing better than waking up in the morning knowing that you have secured your financial life and own it.

4. Opportunities

Perhaps you hate your job, you’re not getting on with your supervisors, or it’s a toxic work environment.

Having little to no debt because you took the pay-off mortgage route offers you many movement opportunities.

I’m not saying you can’t quit or look for another job, but most people stick around, especially if they are too scared to find a comparable career and income level.

Also, the more money you get, the opportunity to save may open other doors, perhaps to freelancing, working from home, or starting your own business.

On the other hand, you may want to reduce your working hours from full-time to part-time, and with no debt, you may have this opportunity.

The fact is that debt digs a hole in front of you and often prevents people from jumping.

5. Budget Flexibility

I know we have become relaxed with our monthly budget since we paid off our mortgage, especially in our miscellaneous category.

But we’re ok with that, even though I’ve had some people question the extra expenses.

Having debt freedom means we can add adult allowances to our budget and save for family holidays every month.

For example, if you feel you have all your budget categories covered to your maximum capacity and are debt-free, then you can increase your food budget.

Over the years, we had a tight grocery budget, but it has been just the past two years that we’ve increased it so we can afford to spend more on what we want to enjoy.

There’s no way we would have done that had we still needed to pay off debt.

6. Increased Savings Power

When your mortgage is paid in full and as you age, you may want to downsize, freeing up cash for your savings.

Mrs CBB and I talked about getting a bigger house once after we paid our mortgage, but changed our minds.

Although we are nowhere near retirement age, buying a bigger home makes no sense as we only have one child.

A big house will be too much for us as soon as he leaves for college or university (if he leaves, haha), and we don’t want that responsibility.

Since we are younger and mortgage-free, it allows us increased savings and power to boost retirement savings or do things we want to do, such as travel.

We even paid $48,000 cash for a new truck in 2017 without going to the bank for a loan.

What You Do Today Affects Your Tomorrow

Although today we are aggressive investors, we weren’t always that way.

However, since we chose the pay-off house as the first option, we’ve taken a different route.

I’m unsure if it is because we have that sense of ownership and control over our home, but we have been investing more money ever since.

If getting retirement ready early means you take the pay-off house option, invest first, or do both simultaneously, then so be it.

Again, do what’s right for you and not what others feel is right.

Discussion: What perks would you get if you first took the pay-off house option? Leave me your comment below, and I’ll be sure to respond.

CBB Posts You May Have Missed

Below is a recap of my blog posts over the past two weeks so you can catch up on your reading.

• How To Return To School As A Parent Earning A Minimum Wage Income
• 8 Good Money Habits That Will Change Your Life + Net Worth Update Sept 2019
• Slow Cooker Keto Vegetable Beef Soup
• 8 Couple Money Management Success Tips
• How To Stop Living For Your Next Paycheque

Mr. CBB’s Motivational Corner

This quote I created yesterday came about because the blog had an issue I found in the morning.

After I accidentally wiped out the blog, I used this motivational quote.

I panicked but had faith that I could restore the blog because I paid money to back up the blog, so I’m re-writing this blog post.

My apologies to everyone who couldn’t read my post yesterday before I pulled that magic trick.

I learned that by staying calm, I could email the people I needed to find the help required to get CBB back up and running.

Fan Deal Of The Week

This is Jen’s last garage sale deal for the 2019 season.

I encourage you to send me a photo of your shopping deals and a cost breakdown.

Every submission will be entered into a yearly draw to win a PC Grocery Store Gift Card!!

Hi everyone,

Here are all of my garage sale deals of the week:

• 3 Snooztime pillows $3
• Bag clips $.50
• BNIP candy cane lights
• Large roll of gift tissue paper
• Penny roll holders
• Sanding block
• Magnetic fidget toy
• Carabiner clip Christmas plates and napkins are $11 altogether.
• Total spent $14.50

Thanks, Jen 🙂

Frugal Recipe Find

Perhaps I’ve been living under a rock, but I had never thought of or tried Chicken Gnocchi Soup.

It’s a copycat version from the famous Olive Garden restaurant in the U.S.A., which we don’t have in Canada.

We make homemade keto gnocchi, and I am going to make this recipe keto-style, and I look forward to trying it.

Blog Update

As I mentioned above under my motivational quote, I was the cause of the major disaster on the blog yesterday, for which I apologize.

I have no idea what I am doing, so I pay for backup and have Sara as my girl in the background fixing stuff.

That’s another good point to bring up when you try to invest money and have no idea what you are doing.

Put the extra cash on the mortgage and leave the investing to the pros.

Sometimes, when I see a problem, I attempt to fix it myself to save money, but as you can see, it isn’t worth it.

Not only did I lose my entire blog post, but I did not have it backed up, so I had to spend 5 hours re-writing it today.

I wouldn’t let it slip away, especially since so many of you messaged me that you tried to read the blog post, but the link was broken.

Other than me getting banned from my Cpanel, we are still working on organizing a few CBB pages on the blog and adding a freebie for new subscribers.

Home Update

We’re gearing up for Halloween in the CBB home as we finished decorating yesterday, apart from adding the black and orange streamers and caution tape.

It rained all last night, so it was a good thing that we waited, and it won’t matter until Halloween day anyway.

This year, we have one pumpkin that our son bought at the pumpkin patch.

Typically, we carve our pumpkin on Halloween night, and Mrs CBB uses the seeds to roast it

. I’m not a fan of them, but she loves them.

I have four ferns that I still need to bin, but with all the nice weather we have had, they are still thriving and look great.

We did manage to get rid of the parsley, but it grew back just as fast, so we chopped it and made a parsley puree with garlic, ginger, salt, and olive oil in the food processor.

The back garden decor has been brought in for the winter, and I’ve put a tarp over the A/C machine to protect it.

I’m not looking forward to the cold weather, but until we see the white stuff, I want to finish all of this work.

That’s all for now, CBB friends.

Mr.CBB

Saturday Search Term Giggles

Every week, I get tens of thousands of people who visit Canadian Budget Binder because they have searched online and found my blog.

Yes, I can see your search terms; sometimes they are funny.

• How to retire on a shoestring: That’s not where I planned to retire.
• Staples for a keto diet: I read that wrong, but it’s still funny. No staples are not part of a keto diet. Haha!
• Proper budget to save for a mortgage: There isn’t a right or wrong budget as long as you use a budget.
• Where in Streetsville can I buy a bag of milk and pay for it in a week? Hmm, that’s a tough one. I don’t think you can get milk donations as part of the food bank. I know some small shop owners may be able to accommodate someone in need like this.
• Cinomon Buns– Haha, why am I hearing Pokemon?

That’s all for this week, my friends; see you again in 2 weeks for the following Saturday Weekend Review!

Mr.CBB

• How To Calculate Monthly Grocery Costs
• 8 Costly Baking Ingredients To Stockpile
• The Best Way To Track Your Monthly Grocery Expenses (Free Printable)
• How To Create A Budget When You’re Broke
• Simple 10-Step Mini Budgeting Series