Pay off your mortgage?

It’s a scenario I see all the time: someone is downsizing, has built up plenty of equity, and is excited about the idea of being completely mortgage-free. The thought of not owing a bank a dime is comforting — and I get it.

But here’s the question: does aggressively paying off your mortgage actually put you in the best financial position?

Let’s break it down.

The Appeal of Being Debt-Free

For many homeowners, the dream is to use the equity from their current home to buy the next one outright, or to pay it off as quickly as possible. The motivation is usually emotional: freedom, peace of mind, and a sense of security.

And while those feelings are real and important, there’s another side to the story that’s often overlooked.

Why Prepaying Might Not Be the Best Move

Most mortgages today carry fixed interest rates that are historically low (especially if the loan was taken out in the last few years). Paying extra toward a loan like that can mean locking your money into a place where it’s not working very hard for you.

Here’s the truth: your mortgage isn’t usually the biggest threat to your retirement plan. The real risk is missing out on years of compounding growth — growth that can outpace inflation and protect your lifestyle down the road.

The Math Behind the Choice

Consider this simple example:

• Putting an extra $500 per month toward your mortgage for 10 years might save you about $22,000 in interest.

• Investing that same $500 per month over 10 years, assuming a 7–8% annual return, could grow to around $86,000 — nearly four times the benefit.

On top of that, your home will appreciate in value at the same rate whether you owe a lot on it or very little. And once your money is tied up in your home, it’s not easy to access — you might have to refinance, pay fees, or take out a higher-rate loan just to get it back.

The Bottom Line

There’s nothing wrong with wanting to be debt-free. But before you rush to pay off your mortgage, consider whether your dollars could be working harder for you somewhere else. Investing instead of prepaying keeps your money liquid, compounding, and flexible.

When retirement arrives, you could still choose to pay off your mortgage with your investments — but you’ll likely have more wealth built up and more options on the table.