SERVING Winnipeg and Manitoba - MOBILE
Michael Schroeder
C   P 204.229.3214
Email mike.schroeder@mtgarc.ca

Should you pay down mortgage or invest?

Jun 7, 2017|Source: The Toronto Star

Its a perennial personal finance question: are you better off paying down your mortgage faster or investing instead?

Juan Pablo de Dovitiis finds himself grappling with the perennial personal finance chestnut of whether he’s better off paying down his mortgage faster or investing instead.

With mortgage rates sitting near record lows, the 40-year-old Torontonian figures the return on his invested dollar should exceed the guaranteed savings from making additional payments on his home.

But with many experts warning rates will rise in Canada in the coming years — as high as a few percentage points, suggests Desjardins chief economist Francois Dupois — de Dovitiis wonders if chipping away at his mortgage is the smarter bet.

“Pay down my mortgage or invest,” he says. “How do I find out what’s the best course of action?”

Jason Heath, a fee-only financial planner with Objective Financial Partners in Markham, says in theory investing should win out over debt repayment provided you’re a long-term, aggressive investor. But that’s not necessarily the case in practice.

“Over the long run if you look back historically, stocks have returned a higher percentage than the average mortgage rate in Canada — but not everybody is going to be 100 per cent invested in stocks and stay invested, or not sell out at the wrong time,” Heath cautions.

Unlike a conservative investor who favours fixed income investments like bonds or GICs, he says, a more aggressive investor — or someone with no less than 50 per cent stocks in their portfolio — will be more likely, though not guaranteed, to net a higher return.

“But someone with a low risk tolerance should just pay down the mortgage,” Heath says. “It’s a high guaranteed rate of return even if your interest rate is only 3 per cent.”





PROUD SUPPORTERS OF

Total amount raised
$16,804.00
Updated: 09/11/17
Learn More

TODAY'S RATES

TERMPOSTEDMA RATES*
{{rate.Term}}{{rate.Posted}}{{rate.OurRate}}

Subject to change. Conditions may apply.
Updated: {{RatesData.Modified}}

LEARNING CENTRE

Considering a fixed rate mortgage? Get informed!

Learn More
Renovating your home is within financial reach. Find out how!

Learn More
Is your mortgage coming up for renewal? You should talk to a broker!

Learn More

APPLY NOW

Want a mortgage? Get a mortgage! Apply now!

Apply Now

CALCULATORS

Want to find your monthly payment or what you can afford? Find out this and more with our easy to use calculators!

Learn More

OUR TWITTER

TESTIMONIALS