Why Paying Off Your Mortgage Might Not Be the Best Financial Move

For many Canadians, becoming mortgage-free is considered the gold standard of financial success. But focusing all your financial energy on eliminating your mortgage may not be the most effective path—especially if it means missing out on the long-term, compounding benefits of investing.

If your mortgage rate is 5% and your investments can earn 7%, every extra dollar put toward your loan effectively costs you 2% in potential return. That gap may seem small, but over decades, it can mean the difference between a paid-off home and a paid-off home plus a sizeable investment portfolio.

Inflation adds another layer. Over time, the real value of mortgage debt shrinks. You’re repaying it with future dollars that are worth less, making that debt feel less significant in both practical and psychological terms.

Still, the appeal of mortgage freedom is strong. It offers peace of mind, simplicity, and a clear milestone. But that emotional payoff can come at the price of flexibility. Unlike home equity, investments can be reallocated, accessed, or pivoted as circumstances change.

This doesn’t have to be an either/or decision. In many cases, the best approach is blended—paying down debt while still investing for the future.

There’s no universally “right” choice here. The right path is the one that aligns with your goals, risk tolerance, and overall financial plan. But in 2025, it’s worth questioning whether traditional advice still fits today’s economic reality.

Because while being mortgage-free feels good...Building wealth might feel better.

Have questions? Send me a note and I can introduce you to a great planner for questions and planning.