Why You Shouldn’t Pay Off Your Home Loan
Updated: Mar 29, 2020
Paying off the home loan is one of the most common financial goals cited by families.
Paying off the home loan gives families a sense of security and stability not matched by any other financial goals.
It’s also one of the most expensive financial goals to attain, which is why it’s so challenging.
FACT: Did you know that paying off your home loan over a 25 to 30 year time frame could see families pay back more in interest than the amount borrowed?
That’s just crazy!
Focusing on just paying off your home loan can be just as financially harmful.
You need to also build up enough investment assets to fund your future retirement, not to mention your other financial goals such as;
Upgrading the car
Private school fees
You get the drift
The key word here is BALANCE
Take a look at the Case Study below.
Nicky started her saving earlier so she got the benefit of compound interest for the first 5 years. This made a big difference to her final balance. In many cases, even if you double your deposits at a later date, you may never catch up to people who start saving earlier.
Unfortunately, financial security is more than just being debt free. You still have to accumulate enough assets to fund a future retirement, which could be more than $1,600,000
Remember, if you don't find a way to make money while you sleep, you will work until you die, or you will be forced to sell the home you spent your working life paying off.
Neither of those scenarios look attractive to me.
Information published on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in this document is General Advice and does not take into account any person's particular investment objectives, financial situation and particular needs.
Before making an investment decision based on this advice you should consider, with or without the assistance of a qualified adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. Past performance of financial products is no assurance of future performance.