Paying Off Your Mortgage In Canada Early Will DESTROY Your Finances

If you pay off that mortgage faster, then the only way to re access that money is by taking another loan, which as we all know, is a lot of paperwork. So understanding that as you pay off something, it's just creating a different set of issues that you're now going to have to deal with.

Paying off your mortgage early may destroy your finances. I'm here with my colleague Dan Allen. I'm Liz Lamond. We're infinite banking practitioners with the Nelson Nash Institute. And we're here to talk about what. Why paying off your mortgage early may not be the best approach for your overall financial health. So, Dan, one of the things that people talk about when paying off their mortgage and we should address first is the emotional side of paying off your mortgage. There is some advantage to that for sure. So let's talk a little bit about that and then we'll talk about some reasons why paying off your mortgage early may not be the best approach.

I've come across people, and I'm sure you have too, that are really so emotionally attached to the fact that they could own their own home. And that's just become something that just motivates them and drives them to a point where that becomes a real emphasis for, hey, feel so much better if I can own the place I live in. And I get that. So when I talk to people about this topic that, you know, we're going to speak about today, I always say to them, you know, this may be an emotional decision for you, so I'm going to give you the latitude to know that and to, and to own it. If it's something that's really, you're really passionate about, and if that's something that really matters to you and you're not going to be comfortable until you get there, you have to understand yourself. And that may be a bigger priority than just focused on how you could do better financially if you didn't pay off your mortgage as quickly as someone must do.

And I think, you know, understanding your own investor profile and what you're wanting to achieve financially is a really important part. But let's dive into why it may not be a good idea to pay off your mortgage early. And let's have a look at like, what equity really means. So equity in the property is when you have built up the amount of that you own, I guess, of the, of the value of that property. However, equity is kind of a false thing in that equity can't buy you groceries at the store, equity can't buy you milk, equity can't do the Things that you might need to do day to day equity is great, but you would need a way to access that equity so you could completely own your home. But what is happening to that money now? It's actually trapped inside your home. So that money is actually not working for you. It's just doing one thing, which is owning your home, which again may give you an emotional sense of wellbeing. And there's value to that for sure. But if you're looking at your financial health, perhaps there's something better that could be done with that money. Perhaps there's something that it could be working for you rather than just doing one thing at a time. I think another really important thing to understand is if you pay off that mortgage faster, then the only way to re access that money is by taking another loan, which as we all know is a lot of paperwork. So understanding that as you pay off something, it's just creating a different set of issues that you're now going to have to deal with.

As you get more and more equity in your home, you really don't change the value of your home. It doesn't become more value because you've got a higher chunk of equity in there. All that value you've got there, it's locked in a place and there is a way to get to it, but it involves having another loan.

We have a really great example that I'd love to walk through with you, Dan, about what happens if you owed 100,000 on your mortgage and 100,000 showed up. Should you just pay it off and have, as you said, a mortgage burning party or should you do something else with that? So let's just kind of talk through that example.

And again, I'm just going to encourage you and as you listen to what we have to say, if you have a comment, please just put her in the bottom. Like there'll be a place where you can put comments. We'd love to hear what your comments are about whether you should pay off your mortgage early or not. That'd be great. So yeah, going back to that question. So if you all of a sudden you had all the money you need show up to pay off your mortgage, what would be the downside of paying off your mortgage? Well, if you do take that $100,000, put it against your mortgage, all things are good now. You own your home, no more mortgage, all that good stuff. But what you've done though is you've basically, you can't access that $100,000 anymore. So if an opportunity came along or God forbid, some kind of an emergency come on along in your life, well, then you have a problem to access that equity again. And so it's nice to have to put your money at work for you somewhere is always a way to create wealth. Some of the options that you've taken away from yourself just to, you know, just to speak about it briefly, is that's what you've done. You've basically put your money in a captive place that you have to go through other hoops to get it out again. And wouldn't it be better if you kept that and put that money to work for you somewhere else, where it's going to grow all the time for you and value. And that's what I would encourage someone to do.

And I think the really important part around this whole equation, Dan, is we're not saying not to pay down debt. We're just saying be mindful of the best way to pay down debt. Now what we teach people is how to own their own debt. And then that really changes the equation because you have a lot of flexibility in terms of how you can use that debt and what you can do with it. And when you do have 100,000 coming along, if you own your debt and you pay off the debt that you own, that you have access to and still have the ability to reuse that money later on, then that's going to change the flexibility that you have to capitalize on options. So it's about this discussion is more about where does that debt reside? Does it reside in somebody else's bank where you don't have the options as to what happens to that if you make extra payments? Or does it reside in your own bank where you have the options as to what you do with that money and how you can recycle it and make the most of opportunities or deal with issues that come up in your life that are unexpected? So either way, it's about you taking back control of that financing function in your own life.

That's one of the things I coach my clients to do now. So if you're wondering about what I would say to someone regarding this, first we'd have a great conversation about why it makes sense to do this. But it would be, look at how long you can extend your mortgage, make it as long as you can, and make your mortgage payment as small as you can. And the whole reason behind that would be, is to free up cash flow and to give people the ability to start building equity in their own banking system. Just like you were speaking about Liz So someone can build up that equity there and then over time. In fact, if you do want to talk to one of us about how that may work, we can show you how over time your mortgage, you know, we focus on how long it's going to be out there. You can actually recapture that amount from your mortgage into your own banking system over time. And where that volume of interest that we all focus on, what's the reason why we want to pay our mortgage down quickly? Well, the financial institutions are telling us that if you do that, you can pay less interest over time, which is true. And so we can help you with that whole structure, get to a place where you own the debt and then as you continue to pay off that home, because now you're paying it back to your own banking system and it will feel like a loan, it'll look like a loan, because it is a loan. And you'll be using the cash value that you have in your high cash value dividend paying whole life insurance policy as collateral. And you will get a policy loan. Your money that you've been investing into your policy will keep on growing, it won't stop growing and you'll be able to leverage it and you will actually have access to funds to be able to pay your mortgage down quicker. And to me it's just once you understand what we teach, and that's what I'm going to encourage people to do, is go look at more of our videos and understand how the infinite banking concept works and how you could use it in a smarter way to pay off your mortgage without destroying or make something that may limit your possibilities. But financial opportunities, but give you more opportunities financially because you'll be building an asset as you pay off your home. And that's just the beauty of what we teach. Liz.

From what you said, Dan, it sounds like you're saying my money can do more than one thing at the same time.

It can. You can actually have your $1 and use it multiple times through this process.

And I think, Dan, we've been talking about using this for your own mortgage, but this equally applies to real estate investors. So if you invest in real estate, you can apply this principle to that as well. And here' the best bit. Now the tenant is paying back into your system. So not only are you getting somebody else's working harder for you, but you're still building an asset at the same time as you're getting that value. And that's also something we work with people around is how to accelerate the things that they're already doing out there in the marketplace.

I appreciate how some people just believe that if I can just get that mortgage off my back, that's going to be a good place for me and my family. And that is something that, you know, as we said earlier, you're going to have to weigh for yourself. This is a way to do that and in a way that sets up your family in a better financial position than if you follow what we hear out there in the marketplace and how to accelerate pay down your mortgage.

That is a way that you can get to there, but we can help you with a process that will get you there, that will give more financial value to your family in the long run. And that's why we love what we do, opportunities that we can create for people to help them improve their financial wellbeing. So when you think about your mortgage, just ask yourself that little what happens if I come into enough money to pay off my mortgage tomorrow? What would I do? What should I do? That's what I'd like you to think about.

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