In 2023, mortgage interest rates are a key concern. This is a steep difference between the tail end of 2008 to 2021 when the average interest rate seldom broke past two per cent (it’s three per cent and climbing at the moment). This has led to questions on whether (for those who have the means) they should go ahead and pay off their remaining mortgage. Here’s our answer:

The general answer for most people is going to be no

Many (but not all) people will find that paying off the entire mortgage at once has little benefit, and just results in a loss of liquidity. The rationale goes something like this:

If you owe $300,000 on your remaining home loan, and you have $300,000 in cash, your net position is: ($300,000 cash) – ($300,000 debt) = $0

If you repay your entire existing home loan, your net position then becomes:

($0 cash, as you’ve repaid the whole loan) + ($0 debt) = $0

However, the former is in a better position than the latter.

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