Short answer: there’s no ideal or specific age by which you should have paid off the mortgage because everyone’s financial journey is different and begins and ends at different times. So, it’s always a dilemma to think about whether you should pay off your mortgage early or let it take its course as you continue to make monthly fixed payments. It’s always great to not have debt or to pay it off as soon as you can so you have funds to invest in other important things such as an emergency fund or maximizing your retirement savings.
Different people have differing views about whether you should focus more on investing any extra amount you may have elsewhere or use it to pay off your mortgage. Some say it’s always better to invest and get returns rather than put that extra cash into mortgage payments since it already has a fixed period.
If you pay off your mortgage early, you’ll save a lot on interest. This could work as your return on investment. Moreover, you’ll be relieved to be done with the debt altogether.
You’ll also build equity, which means you can qualify for refinancing with lower interest rates, further saving some money.
However, the downside to this can also be that your extra funds are tied up in a mortgage instead of being used for say emergency costs such as medical expenses. Moreover, your money is tied up in property which is not an easily liquidated asset. You cannot immediately convert your property into usable cash since you’ll have to first wait for a buyer to offer the amount you want to sell it for. This may take time, or never materialize, especially if you’re on a schedule.
There’s no right answer, as you see, except that you’ll need to weigh your financial and life conditions to prioritize spending and saving. If you’re in a phase of your life where you can afford to have money tied up then you could consider extra payments. On the other hand, if you’re in a situation where you’re always in need of some liquidity, you should consider investing in assets that can help you gain more in the short term. It can be helpful to consult a financial advisor to strategize how to allocate the funds accessible to you.
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