^+ If after tax cost of interest is < after tax profit from investing, don’t pay it off early. GENERALLY SPEAKING.
canadian real estate and us real estate are completely different animals. because of the mortgage interest tax deduction being deductible for landlords but not outright homeowners, it is almost always more affordable to rent. in Canada, you need appreciation of something like 2-3% per year for at least 6 years (no moving) to break-even. this is especially so outside of major cities. for example, i currently rent at $1,200/mth in Waterloo, ON. and to compare with owning a similar house (row of townhouses) sold for $270,000.
With 10% down ($27,000), my mortgage interest would still be $700/mth (assuming 3.5% rate), op cost on $27,000 low risk would be $70 (assuming 3% rate), cost to finance appliances which are included with renting is $200/mth (assuming $20,000 with 10 year life and 8% rate on non-secured LOCs in Canada), condo fees of $200/mth, taxes of $200/mth and additional insurance costs of $40/mth to total $1,410. I am literally saving $210/mth ($2,540/yr) by renting and this doesn’t include any amortization of major projects like a new roof or things of that sort. in canada, because only the landlord has a tax writeoff, you have to make 2-3% for approx. six years to cover a single move (5-6% of house = $15,000 + (6yrs x $2,540)).
^ Given the canadian housing market has been on a tear for 10 years now, getting that 2-3% a year for the next 6 years will be an uphill battle. At best, I see flat returns for the next decade.
FYI, I no longer work at this company anymore. The clown I used to work with wants to be friends and hang out. I don’t have the gall to tell him that he was a joke to work with.
2 years later…and the Canadian real estate mkt is as strong as ever.