Pay Down Your Mortgage First

Recently, a major Canadian financial publication supported the fact that it is prudent for us to save and pay down the mortgage before putting monies in an RRSP.

Malcolm Hamilton, a respected actuary, at Mercer Human Resource Consulting confirmed the wisdom of your mortgage payment. He says that there is no significant tax advantage of RRSPs over mortgage payments. When you pay down the mortgage, you pay less interest totally over the life of your mortgage. Since mortgage payments are made in after-tax dollars, you save tax and interest on the reduced principal.

Of course, your mortgage rate is guaranteed, unlike most investments. You control this percentage rate as it's based on the mortgage rate for your property. When your principal property is sold, it can be tax-free, unlike other investments. Other personal factors can support this decision too.