Should we pay off our house early? What about the next house? We haven’t bought a second home yet — we plan to keep our current house at least another 12 months.
Lately we’ve been weighing whether to accelerate payments on our current mortgage. Part of that decision depends on whether we’ll rent the house out or sell it. If we sell, paying the mortgage off early makes little sense. But with rising income over the last few years, it’s tempting to apply every bit of extra cash toward the loan after handling student loans and retirement contributions.
Thanks to side hustles, we’ve been bringing in roughly $8,000 extra each month, and that surplus makes it difficult not to prioritize debt reduction, even when some debts may be considered “good” by financial planners.
Earlier this month, a friend reported writing an $8,700 check to pay down their mortgage sooner. Many readers cheered, while others prefer a slower repayment pace. Another friend recently celebrated paying off their first house entirely — a huge milestone.
I’ve run the numbers repeatedly and, yes, we could clear our current mortgage by next year if we decided to. That raises obvious questions: why consider buying a second home if we can retire this mortgage so quickly?
We bought our current house when we were 20. It’s a fantastic starter home, but we always knew we’d eventually move to something larger. Professionally, I understand using debt strategically. With historically low interest rates, leveraging borrowing can be sensible. Still, I have an internal voice that insists mortgages feel different — paying them off feels like freedom.
Advantages of Paying off Your Mortgage Early
The most immediate advantage is peace of mind. Eliminating the mortgage would leave us with no consumer debt, which is an attractive and liberating position to reach. I value a substantial emergency fund and the security it provides; paying the mortgage off early would amplify that sense of financial stability.
Removing a significant monthly payment would free cash flow for other goals: travel, saving, investing, or accelerating future mortgage payoff on a new home. While property taxes, insurance and maintenance remain when you own a home, shedding the mortgage payment reduces fixed monthly obligations and makes budgeting easier.
Once my student loans are resolved — anticipated soon — I want to redirect funds to other priorities. We do have car loans at low rates, so they’re not a high-payoff target. I’m not proposing allocating 100% of surplus income to mortgage payoff; retirement contributions and other goals would continue. But making large extra payments toward the mortgage when rates are relatively high compared to other guaranteed uses can be appealing.
If your mortgage carries a high interest rate, paying it down or refinancing is often a sound move. Although higher mortgage rates are less common today, this remains an important consideration for many homeowners.
Advantages of Paying off Your Mortgage Slowly
Paying the mortgage off more slowly — or sticking to the scheduled payments — also has clear benefits. With interest rates low, investing extra cash elsewhere often yields higher returns than the interest saved by accelerating mortgage payments. A dollar paid into investments today can grow substantially over decades, while the fixed mortgage payment’s real cost diminishes with inflation.
Maintaining a diversified approach ensures your money isn’t concentrated entirely in real estate. For households that would otherwise funnel all spare cash into a mortgage, that concentration can be risky if a large, unexpected expense arises. Keeping liquidity in investments, retirement accounts and cash reserves provides flexibility and emergency access to funds.
There’s also the tax angle: depending on your situation, mortgage interest may be deductible, which changes the effective cost of the loan and can make slower repayment more attractive.
If you carry high-interest debt, aren’t contributing enough to retirement, or lack an emergency fund, prioritizing those obligations ahead of extra mortgage payments usually makes better financial sense. High-interest loans should be tackled first.
Why are you paying down your mortgage quickly or slowly?
Everyone’s goals and comfort levels are different. Some homeowners value the psychological relief and guaranteed return of paying off debt; others prefer to invest, diversify, and take advantage of lower interest rates to build wealth more efficiently. The right choice depends on your rates, savings, risk tolerance, and other financial priorities.
If you don’t currently have a mortgage, what would you do?
For those without a mortgage, decisions about borrowing for a home depend on your broader financial picture. Ensure you have an emergency fund, are contributing to retirement, and have paid down high-interest debt before taking aggressive action on a mortgage. If you choose to carry a mortgage, treat it as one part of a diversified plan: balance paying down debt with investing for the long term so you don’t miss potential growth opportunities while preserving financial security.