Paying off a mortgage is a long-term financial priority. However mortgage holders have other, short and medium term financial goals that they need to balance this against. All should aim to build up an emergency fund in cash, but in addition they may want to build up funds to pay for their children’s education or buy a new car, for example. It’s difficult to save for such goals if you put all of your disposable income towards paying off a mortgage. And it’s important to bear in mind that it’s not always straightforward to extend your borrowing on a mortgage again once you have paid it off. In some cases, it may make sense to pursue different strategies for different financial goals – and investments could have a role to play for some of them.
For some people who are comfortably meeting mortgage payments, their financial goal might simply be to pay off their mortgage as fast as possible, by generating returns at a faster rate than the interest their mortgage charges. If they are willing to take on some level of risk in order to do so, then investments could be part of their approach. As with many important financial decisions there isn’t one size fits all answer. It’s important to consider all the aspects of your personal circumstances every time. Like all investors, mortgage-holders must consider the possibility of their investments declining in value and ensure that they have a plan for paying off the mortgage at the end of the term should that happen. However, by taking on some risk with their disposable income, there really are times when investing at the same time as paying a mortgage may help to make you mortgage-free faster.