So many people wait and wait for that blessed day when they make their last mortgage payment and own their home free and clear. The average monthly Canada mortgage payment is about $1,500 – that’s a large chunk of change that’s left over each and every month when it’s all paid off! But, what do you do with it now? While you’ll undoubtedly blow some of it (totally okay, and completely expected,) you might also want to invest it, give it away, or take an early retirement. So, what do you do with your money once you’ve paid off your mortgage?
Put it into RRSPs
This is one of the most common things that people do with their mortgage payment when it’s no longer necessary to give it to the bank. Of course, you don’t have to give the entire portion to your RRSPs, but the more you do, the more you’ll have when you need it. With full-time careers and children that need to be taken care of and put through school, most people don’t put as much into their RRSPs as they would like to, or they think they should. Putting the money away once you have the money to do so is a great way to get rid of that debt, and reinvest in your future.
Retire now!
Of course, why just sock money away for retirement when you could take that $1,500 a month (or so) and retire now. This is a most popular option for couples who live together and one person is going to continue working and generating extra income. It’s also one of the best ways you can feel truly free from the weight of paying that mortgage payment every month.
Invest – but wisely
Investing in something other than your retirement is also popular for Canadians who have paid off their mortgage. However, it’s where you put your money that matters. Many think that now is the time to buy mutual funds and invest in stocks, but that’s risky business and is often only advised for those who are very familiar with investing and know how to get the best returns. For those who aren’t as investment-savvy, investing your money back into your home is probably a much better option. Taking out a home equity loan or HELOC and paying it off just as you did your mortgage (although now, probably with a lower monthly payment,) is the wisest way to invest. Then, put the money back into your home by renovating that older, outdated kitchen you have, or by putting on that extra room in the back you’ve always dreamed of. You’re sure to get a return, because it will add value to your home; and you’ll be able to pay off the low monthly payments easily.
Move – but wisely
Now might not be the time to go out looking for that massive 8-bedroom home you’ve always dreamed of – especially if the kids have moved out and you no longer need the room. Instead, consider finding a smaller home that will be just as comfortable when kids and grandkids visit, but that is much less than your existing home. Sell your home to make a profit (especially if you’ve used that home equity loan to improve it,) and then either buy the new home for cash, or put down a massive down payment so that your future mortgage payments are pennies.
What you do with your money after you’ve paid off your mortgage is up to you. Just remember that now is the best time to make your money work for you, and decide what you and you alone want to do with it!”
