So a lot of people have asked if I regretted or wished I had taken a cheap under 4% mortgage on the apartment instead of cutting a cheque for $300,000 (this is just my half, our place is worth $600K) with 0% return so to speak.
I had to sell a few investments to get this cash and it did feel very painful and exciting to hand over all that money on a piece of paper, but I mostly did it for these two main reasons:
Peace of mind
I don’t like owing people money. I’m not into debt, ever since I conquered $60,000 of student loans, it has given me a lot of respect for what it means to owe money and to me, it is stressful.
I have to come up with the payment, I have to be on time.. all this stuff, plus paying interest when I don’t need to, sort of irks me.
Uncertainty of income
Let’s say I took the mortgage.
I didn’t actually know if I would or when I would get a contract again, and I would have to keep slowly dipping into my investments to keep making those payments.
Sure, I had the $300,000 invested, let’s say… without a steady income coming in, I would not be able to plan how much I would keep in cash to keep those payments going, and how much I would keep invested.
Without a mortgage, I only handle condo fees and taxes which are around $500 a month, instead of $500 + $1500 for the mortgage which is $2000 a month, along with actual living expenses.
All of this means, I’d have to keep a good $100,000 in cash to cover the next 3-ish years, and watch my spending SUPER carefully so I don’t run out before getting a contract.
In short, yes, I gave up let’s say $15,000 a year (5% return) for 5 years which is about $75,000, but in return, I gained certainty, stability and peace of mind.
I wouldn’t be able to predict when I would work again, for how much… and for how long. All of this is very stressful when you have a debt to pay off at the back of your mind.
I can just cut back on expenses and know that I will be fine if I can just pay my basic living ($3500 a month, includes things like dental care, and Little Bun daycare fees).
If I had a mortgage on top of that, I would need $5000 a month. Sure, I’d have a heftier safety net set aside to compensate but even so…. the thought of cutting it so close, bothers me.