RetireJapan

What are people's thoughts and experiences on their mortgage term?

Paid off before/by planned retirement? Do some take out a 35yr loan even if that extends repayments into 70s?

Is it easily possible to repay the mortgage earlier than the schedule?

My mortgage will go into my 70's, but as long as I keep investing how I am, and interest rates stay the same, I have no desire to pay off my mortgage early (even though this is an option).

My thoughts on this have really changed since I got a mortgage...

-if you are eligible for the tax refund, maxing that out seems like a good idea
-with interest rates as low as they are, borrowing at 0.5% and investing to get 4-5%+ per year seems like a no brainer
-life insurance on mortgages means should you happen to die your family gets the loan paid off and the investments that you didn't spend on paying the loan off early

As long as you budget for it I don't see an issue with having a mortgage into retirement (it's often going to be cheaper than the equivalent rent).

I made early payments to my mortgage for a couple of years, then realised it makes more sense for me to keep it. I think I have about 25 years left, so it will be paid off when I am 70 or so?

RetireJapan wrote: ↑Tue Sep 27, 2022 10:57 am My thoughts on this have really changed since I got a mortgage...

Tony wrote: ↑Tue Sep 27, 2022 10:11 am My mortgage will go into my 70's, but as long as I keep investing how I am, and interest rates stay the same, I have no desire to pay off my mortgage early (even though this is an option).

I 100% agree, but I do not yet have a mortgage.

Quite a few colleagues and friends have paid theirs off early, despite understanding this is not the most prudent financial move.

They cite:
A. They feel much less stressed after doing so.
B. Their spouse pressured them.
C. They received funds from a relatives expressly earmarked for this purpose.

I took out my mortgage in 2005 (35 years) but paid it off in 2016. The main reason was just to be completely free of any monthly housing costs. It might not have been the best move financially but it has given me a tremendous sense of freedom from debt and I don't regret it one bit.

goodandbadjapan wrote: ↑Tue Sep 27, 2022 1:26 pm I took out my mortgage in 2005 (35 years) but paid it off in 2016. The main reason was just to be completely free of any monthly housing costs. It might not have been the best move financially but it has given me a tremendous sense of freedom from debt and I don't regret it one bit.

We paid for our house build here in cash for similar reasons. I don’t cope well psychologically with debt and the uncertainty it brings. Totally understand the other view though.

I took the maximum length (35 years) I could and no insurance. I am not repaying early but this could be an option in the future.
I would have been fine with a 15 years loan or even shorter but I wanted the freedom to decide what to do with my money and not be pressured to keep a high paying job for the sake of the loan if I didn't want to.

The reasoning was as follow:
- The cost difference for a shorter loan was low.
- With a long loan the monthly payments are as low as they can get, and early repayment is free anyway. Low monthly payment gives us more freedom as to how we can use or invest our money. Or we can even decide to reduce our income
- Both my wife and I work and we could live on either of our salary. We don't have kids and don't plan on having any. It means that paying for an insurance was not essential

My mortgage will be paid off 2 years before retirement and I like the feel of that. The idea of being debt free as regular paid employment comes to an end syncs with me.

I don't have any plans to pay it off early, the rates are so low and I'd rather have the money doing more productive things.

I took out a 25 year loan to end at age 68. I paid it off early at 62 when I retired early, thanks to a retirement bonus. Many would argue that investing the bonus would have generated more benefit but I think most of those proponents themselves are not yet retired and can still only think about how to grow their money. Retirement is the time to spend, not save.

If you have been prudent or lucky enough, you will retire with an income which enables you to live how you want. We aimed to retire without debt and wanting to know that our income can be spent without concern for debt, saving or market movements.

After many years of mortgage repayments, we greatly enjoy not having any debt. In contrast, I don’t know too many people who greatly enjoy having mortgages, no matter how low the interest may be.

Tokyo wrote: ↑Wed Sep 28, 2022 7:31 am After many years of mortgage repayments, we greatly enjoy not having any debt. In contrast, I don’t know too many people who greatly enjoy having mortgages, no matter how low the interest may be.

It's a good point that illustrates that most of personal finance is psychology, not information nor reasoning. Understanding ourselves is the best way to make financial decisions we can live with.