Should You Pay Off Your Mortgage or Invest? Here’s the Real Deal

So, you’ve worked hard, built up some savings, and now you’re staring down your mortgage balance, wondering: Should I just pay this thing off and be done with it? Or, is there a smarter way to use that cash?

Well, in a recent episode of our podcast, Ariel and I (Adrian) went head-to-head on this exact topic. I recently paid off my mortgage, and Ariel… well, let’s just say he had thoughts about it.

Here’s the lowdown on why I chose to ditch my mortgage, why Ariel would have done things differently, and what you should consider if you’re weighing this decision.

Why I Paid Off My Mortgage (And No, I Didn’t Drain My Savings)

I had $200,000 left on my mortgage, and instead of using up my entire nest egg, I sold an investment property to make it happen. That way, I could clear the mortgage while still keeping my financial future secure. For me, it was about peace of mind and freeing up cash flow. Here’s what that looked like:

• By paying off the mortgage, I could redirect what I had been paying into savings, allowing me to increase my contributions.
• Crunching the numbers, this put me ahead financially in the long run versus keeping the mortgage. This takes into account putting that $200K into investments vs paying off the mortgage with it and having a larger monthly contribution over the longterm.
• And, here’s a bonus: I can now refinance my home whenever I want, invest that money elsewhere, and write off the interest as a tax deduction (a nifty perk if you’re looking to make smart financial moves).

So, yes, paying off the mortgage made sense to me, and selling that investment property helped me do it without sacrificing my long-term savings.

Ariel’s Take: Invest, Invest, Invest!

Now, Ariel’s take was pretty different. He said I should have taken that $200,000 and used it to buy more real estate. Why? Because, for him, real estate is all about growth. Instead of paying off a mortgage, he thinks it’s wiser to invest in another property, rent it out, and let the value of that property appreciate over time.

Here’s why Ariel thinks this works:

• Real estate can provide a higher return on investment than just paying off a mortgage. With the right rental property, you can create an income stream and benefit from appreciation.
• You can keep refinancing properties to buy more. This is how the “big players” build their real estate portfolios—by continually leveraging one property to buy another.

I don’t disagree with Ariel—investing in real estate is a great way to build wealth. But by paying off my mortgage and refinancing, I’m now able to do the same thing. Plus, I’ve made my mortgage tax-deductible, which gives me even more flexibility and financial benefits. It’s really about choosing the strategy that fits your personal situation.

What’s the Right Move for You?

So, should you pay off your mortgage or invest in real estate? It really comes down to your personal situation. Here’s what to consider:

•Do you value peace of mind and financial security? Paying off your mortgage could give you that breathing room.

•Are you comfortable with more risk and want to build a real estate empire? Then maybe Ariel’s approach is for you.

At the end of the day, the “right” answer is different for everyone. But one thing’s for sure: making an informed decision can make a big impact on your financial future.

Interested in Building Your Own Investment Portfolio?

Are you thinking about buying an investment property or leveraging one you already own? Let’s chat. Real estate can be one of the best ways to grow your wealth, and we can help you get started. Connect with us on YouTube or Instagram for more tips, or reach out directly for a consultation. Let’s find your next investment opportunity!