Should I pay my house off early?

I get this question more than you would expect, and the answer is also not what you expect.?

Should I pay my house off early??

YES.

Should I pay extra into my home loan??

NO.

Let me explain.

Money actually is a simple thing, if you understand the fundamentals. So, the reasoning behind this advice is based on the fact that investments are confused with debt.

People think that by paying extra into their home loan, it is the same as investing. This is wrong for many reasons in my eyes.

The biggest reason is that most people inevitably never pay off their house, as they use the home loan as an emergency fund. They pay extra, then withdraw it every few years and then start over.

And the other main reason is that a home loan is actually “good debt”. It is calculated differently as opposed to the bad(short-term) debt like credit cards.

So, the advice is to rather invest in a real investment like a Unit Trust or Endowment.

It is more profitable to create an investment that grows at +/- 10% per year, and then when you have enough money in this investment, go settle the home loan in one go. THEN CLOSE THE HOME LOAN.

This way you get the benefit of actually having a real investment separate from your home loan, as well as the interest this investment generates.?

But what about the XX% the bank charges for the home loan… This is mumbo jumbo. The way the banks calculate the interest on debt makes it so that your extra payments don't actually grow as investments do. You just have less capital to pay off.?

To end off, I suggest you create an investment, put extra payments into this instead, and then when there is enough money, you pay off your house in one go.

What do you say?