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Managing Your Mortgage and Retirement Savings

Reduce My Mortgage Rapidly or Save More for Retirement?

When it comes to financial decisions, it can be hard to choose the best option. More specifically, what should we choose to do if it’s impossible for us to do both: Save more for our retirement or pay off our mortgage more rapidly?

Here’s a look at what several financial specialists advise. But first, it’s useful to  take a quick peak at current household debt in our country.

“According to the latest figures published by Statistics Canada, total household debt (mortgages, consumer credit, and other loans) has grown to reach 162,6 % of total available revenue, of which the major part is constituted of mortgage debt.” (Source:, par Morningstar, Publié le 16/01/2015)

This answer highlights the fact that for many Canadians, it may be difficult to do both.

So What’s the Best Option In This Situation?

The answer to this question, according to the accomplished financial reporter, Jonathan Chevreau, who manages, really depends on several things, namely:

  • The mortgage amount ;
  • The mortgage interest rate ;
  • The age of the person concerned ; and
  • The stage in life at which you are at.


Cynthia Kett, Director of consultancy firm Stewart & Kett Financial Advisors in Toronto, adds that you must not forget the rate at which you pay income tax. For example, if you are in the 50% income tax bracket, a mortgage at 2.5% interest is equivalent to a mortgage interest rate of 5% before income tax, since for each dollar you earn you pay one in income tax. In other words, as Mrs Kett rightly says, “Paying back your mortgage has the same effect as if you had a guaranteed return at a rate equal to the actual mortgage interest rate. And where else can you obtain the same rate of return without risk?”

It would seem, in fact, that if they cannot both save for their retirement and pay off their mortgage debt, then most Canadians choose the latter, according to Statistics Canada. Statistics Canada bases this on the Canadian population’s unutilized rights to pay into a Registered Retirement Savings Plan (RRSP). But, clearly, there are other ways of saving for your retirement. However, they do estimate that “by 2018, this amount should be greater than 1 billion $”, which is far from negligible.

Paying off your mortgage vs saving for retirement.

The less you owe on your mortgage (a liability), the greater the value of your home (an asset).

Kevin O’Leary, author and on-air contributor for CTV, also believes that paying off your mortgage is the best thing you can do besides eliminating your debts. In fact, he believes it’s one of the most important steps to getting richer. (Source: Financial Post: What to do with your savings: Pay off your mortgage or diversify your investments)

Other factors, of course, may come into play. If you can read French (you can use Google translate or other online translators to help you), I also suggest reading the article by Morningstar on, published on 16/01/2015, for additional information.


I’m available to answer all your real-estate related questions, whether they concern the sale or your property, purchase of a new property for yourself or as an investment, or even rental of your property. Don’t hesitate to contact me by phone, via the information request form on this website, or via email. I’m here to answer your questions!

I also invite you to browse through my other blog articles where you will find information that may be useful to you or someone you know.

~ Marie Paule Lancup, B.Sc., REALTOR®


Category: personal finance

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- 2015-11-22
I work with experienced Sellers and Buyers, First-time Buyers, Non-residents who are investing or relocating, and Investors. Everyone has unique requirements and this is one of the many things what makes my work so interesting! *** Real Estate law and financing of real estate projects has changed significantly in the past few years. You need to be well-informed to make the right decisions and to avoid any potential pitfalls that could end up being very costly, both on an emotional and financial level! I keep abreast of the latest developments in this complex market, and have access to the best experts in related fields. I guide you through all the steps, so you can sell or purchase with complete peace of mind. Happy clients have always been my biggest reward! *** Contact me directly if you're considering selling now or in the future, or if you’re thinking of buying a new property for yourself or as an investment, and discover how to make your Real Estate project happen! Or refer a friend – we’re very generous with people who refer us! I look forward to hearing from you! - Marie Paule Lancup, BSc