Will You Try To Pay Off Your Housing Loan ASAP If You Have One?

One young lady asked me this question at the cbox: "Will You Try To Pay Off Your Housing Loan ASAP If You Have One?"

I believe she was referring to housing loan for residential purpose i.e My Home

For Investing in Property.
Investing in Property is far safer than stocks? - Part 2 and I posted many articles under Label: Education - Property More articles related to discussion on properties

For residential home, let begins the discussion with a quote from Albert Yang.

"A man is not a man; until there is a house that he may call his castle. A woman is not a woman; until she has a place she may call her home. And neither a man nor a woman can say anything about their house, until they are the masters of it, and own it outright and unencumbered."

Many people will tell you that Housing Loan is the cheapest loan in town and you should take advantage of it or else you look like a fool. If that it is really true, why don't you buy the cheapest rice, eat at cheapest hawker stall, and do your shopping at the cheapest supermarket, etc. But life is not like that. Not anything that is the cheapest will offer you a better option. Maybe it is just not for you.

Mortgage Loans

Banks love mortgages as home loans are secured loans. Secured means the bank has the ability to take the home back if you don’t make payments on the loan. Banks often have wars with each other to attract new home buyers with low initial interest rates for home loan.

Often, we hear people said: "I bought a new home at XXX for XXX". Your new home? Have you fully paid up your new home? If it is not fully paid up, then, it is never yours yet, it belongs to your bank, and your bank has kindly allowed you and your family to live there provided you don't ever miss your mortgage payment or else soon you will be homeless.

Next, you may consider how soon do you want to be NET WORTH POSITIVE? In 10, 15, 20, 25 or 30 years time?

Your net worth calculation excludes your residential home as an asset; but includes your outstanding housing loan payment as liabilities.

Net Worth = Sum of All Assets - Sum of All Liabilities.

If you are a very savvy investor who can generate assets at the rate that is faster than your liabilities with those extra cash available and you are already NET WORTH POSITIVE, why should you pay off your housing loan any sooner? You are from a different world from the man who buys a house to call his castle and his wife has a place she may call her home.

You may wish to read more ...

Four Financial Progressive Stages

Debt free and that to me is richness

So my answer to the young lady is to pay off asap the housing loan and quickly moves to Financial Stage 2 and try not to ever go back to Financial Stage 1. Cheers!