Saskatoon Mortgage Broker shares article – The good, the bad and the ugly of Canadian household debt: Should we be worried?


…Provided that the mortgages can be serviced, making mortgage payments is no different in principle than putting money into one’s RRSP. In both cases, an asset is being built that will prove useful in retirement. You might never tap the equity in your home, but it is good to know you can do so if need be; for instance, to fund long-term care at the end of your life or to downsize your residence in order to convert some of that home equity into extra retirement income.

There is also a less obvious reason why mortgage debt is good debt: paying down the mortgage suppresses personal consumption. It forces homeowners to adopt a more modest lifestyle than they otherwise would be inclined to pursue. If paying off the mortgage is a long-term proposition (which it is, for most people), the mortgagee gets used to spending less and, as a result, needs less income after retirement to maintain that same lifestyle. …

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