Frequently Asked Questions
Is it better to pay cash for a house or get a mortgage?
It depends on your goals, your risk tolerance and the mortgage rate compared with what you could reasonably earn by investing. Paying cash avoids interest and debt risk, while a mortgage keeps money available for investing, an emergency fund or other goals. The article’s point is that the extra expected return from investing has to be weighed against the after-tax cost of the mortgage, and that comparison changes as rates change.
How does inflation affect a fixed-rate mortgage?
With a fixed-rate mortgage, your principal and interest payment stays the same while prices and, ideally, your income rise over time, so each payment costs less in real terms. For example, at 3% average annual inflation, $300,000 owed 30 years from now would be worth roughly $124,000 in today’s dollars. The benefit depends on your income keeping pace with inflation.
What is a real interest rate on a mortgage?
A real interest rate is the nominal rate minus inflation, and it approximates what borrowing actually costs you in purchasing power. A 6% mortgage during a year of 3% inflation has a real rate of about 3%. Because inflation varies year to year, your real borrowing cost on a fixed-rate loan changes even though the stated rate does not.
Is mortgage interest tax deductible?
It can be, but only if you itemize deductions instead of taking the standard deduction. You can generally deduct interest on up to $750,000 of mortgage debt used to buy, build or improve a main home and one second home, or $1 million for loans taken out before December 16, 2017. The 2025 One Big Beautiful Bill Act made the $750,000 limit permanent. Most taxpayers take the standard deduction, so many homeowners get no tax benefit from mortgage interest.
About the author
Contributing Writer, Wealthtender
Ben Le Fort is a personal finance writer and creator of the online publication “Making of a Millionaire.” He has been passionate about personal finance ever since graduating University with $50,000+ in debt.
In the eight years following graduation, he paid off all of the debt and built a seven-figure net worth. Ben holds a Bachelor’s degree in economics from Acadia University and a Master’s degree in Economics & Finance from The University of Guelph.
Ben lives in Waterloo, Ontario, with his wife, son, and cat named Trixie.