I shared the article “Why Paying Off Your Mortgage Might Be Hurting Your Wealth – A Wake-Up Call for Ontario Real Estate Investors.”  I wanted to write on the other side of not using the equity in your principal residence.

In the world of real estate investing, there’s a lot of talk about leverage, liquidity, and maximizing returns. But what’s often missing is the psychological and lifestyle side of the equation.

While math might favor maintaining debt and investing capital elsewhere, many Ontario real estate investors still prioritize paying off their principal residence — and for good reason.

Let’s explore why this more conservative approach can make a lot of sense, especially during key phases of an investor’s journey.

It’s Not Always About the Math: Comfort and Peace of Mind Matter

While spreadsheets and ROI calculations are critical, psychological comfort plays an equally important role in financial decisions.

Many experienced real estate investors choose to keep their primary homes debt-free because:

• It reduces stress during market downturns.
  When property values decline — as they periodically do — having a fully paid-off principal residence can offer immense peace of mind. You’re not worried about foreclosure or fluctuating payments.
• It provides emotional security.
  Knowing your home is completely yours, regardless of external financial conditions, can deliver a sense of stability that no investment portfolio can replicate.

Retirement Strategy: Eliminate Personal Debt, Maintain Investment Leverage

As real estate investors near retirement, many opt to pay off their personal homes while still maintaining debt on their rental properties.

Why?

• In retirement, they prioritize reducing fixed personal expenses.
  Without a mortgage on their principal residence, cash flow pressure is minimized, making rental income and other investments stretch further.
• Meanwhile, they continue leveraging income-generating properties where the tenants, not they, are covering the mortgage payments.

In this way, they maintain investment leverage where it makes sense — but choose personal financial simplicity for their primary living expenses.

Smart Asset Use: Leverage Other Investments, Not Your Home

Another strategy savvy investors use is to borrow against other assets instead of tapping into their home equity.

If you have significant investments — say, in rental properties, stock portfolios, or private equity — you can:

• Keep your home debt-free
• Leverage those other, more productive assets when cash is needed
• Preserve your primary residence as a safe, untouchable asset

This approach offers flexibility while maintaining a strong psychological and financial foundation.

Different Seasons, Different Strategies

The key takeaway?
There’s not a single “right” way to structure your real estate and financial plan.

While mathematics might show that keeping a mortgage and investing the difference creates better long-term financial outcomes, it doesn’t mean that strategy is right for everyone.

• Some seasons (like aggressive growth) might favor leverage.
• Other seasons (like market downturns or personal transitions into retirement) might favor security and debt elimination.

Each phase of your journey as an Ontario real estate investor may call for a different approach to debt, equity, and risk tolerance.

Final Thought: Math is Important, But Mindset Matters Too

Before deciding whether to keep or eliminate your mortgage, ask yourself:

“What financial strategy gives me both growth AND peace of mind?”

Sometimes the real return isn’t just measured in dollars — it’s measured in how well you sleep at night.