[danwee]

> Of course, on paper it's a terrible idea to pay off a mortgage early (assuming a reasonably low interest rate).

Why? The longer my mortgage lasts, the more interests I'm paying (no matter how low they are). If I could pay the entirely of my mortgage now, I would because it will be cheaper.

I don't think rich people (the really rich ones) pay their houses valued in 1 million, via mortgages. They pay them upfront (because they have the money). Why on earth would they apply for a mortage that lasts 10-20 years? They would end up paying 1 million + interests.

[LUmBULtERA]

My mortgage is at 2.625%. If I have the cash, even 1 month T-Bills are paying a higher rate than that (about 3.6%). Assume I have the cash to pay it off -- I'm strictly worse off if I pay off the mortgage vs. even investing in 1-month t-Bills.

[toomuchtodo]

Close. Depends on your marginal tax rate and returns post tax compared to the debt rate of interest. At higher tax rates, it gets closer to being a wash with the spread still low. If risk free rates continue to rise, the investment vs pay down benefit becomes more clear.

[lastofus]

Wealthy people have access to lines of credit, secured against their wealth, at low interest rates unheard of to us common folk. This further widens the spread between a very cheap mortgage, and the average 6-7% expected returns from investments (which in turn are taxed cheaply at cap gain rates).

[I_dev_outdoors]

There's still better options. You can get a low interest loan against your portfolio. That way, your portfolio is accumulating interest faster than the loan rate. At Merrill Lynch, this is called a LMA, loan management account[1].

I'm not rich, so I'm not sure what other options the wealthy have.

[1]: https://www.ml.com/solutions/lma-account.html