Ask yourself these questions: do I believe that the value of my home will increase over time? What rate am I paying on the money that I have borrowed for my mortgage? What rate could I get if I invested my money elsewhere?

If your answer to the first question was yes and the rate that you are paying on your mortgage is less than the rate of return on your investments – then the short logical answer would be that it would be smarter to invest your money.

But it’s not that simple. There are also tax implications for investing your money versus paying down your mortgage. For some people it is actually even more beneficial to take that extra money that they would have put on their mortgage and invest it into a tax sheltered invest like an RRSP thereby reducing their taxable income.

What also complicates matters is risk. When I asked above “what rate could I get if I invested my money elsewhere?” consider this: is it a guaranteed rate? Probably not. And if so, it is probably very low.

Here’s another complication: what are your personal goals? Do you want to have your house paid off completely within a certain period of time – like when you hit a certain retirement age?

Some people like to have the best of both worlds and decide take their money that they would have used to pay down their own mortgage and rather invest it in real estate – either in an investment (rental) property or in some other fund that relates to the real estate market thereby benefitting from the growth of their own home AND the growth of the real estate market.

The most important thing though is: to pay yourself first and have a plan and stick to it! Paying yourself first means putting some money away in an “emergency fund” in case you need that new roof or that transmission repair or furnace, and also keeping some money for yourself to give you a quality of life. Plan for the future but live in the now! 🙂