Q – I am 63 years old and may be retiring at 65. I have a mortgage of $451,000 at 2.69% and a line of credit with a balance of $120,000 at prime (8%). The mortgage renewal is coming July 1st.
I have $85,000 in my TFSA, growing at 5% this year.
What is better for me? Pay $85,000 on the line of credit? Pay down $85,000 on the mortgage, knowing that the renewal is coming at very high interest? Or leave the money growing in the TFSA? – José P.
A – The 5% return on your TFSA in 2023 is not impressive. The TSX was up 8.12% for the year. The Dow gained13.7% while the S&P 500 added 24.23%. It appears that you are holding very conservative securities in your TFSA, without much growth potential.
Based on that, the money would be better used paying down the mortgage or the line of credit, whichever is carrying the higher interest rate. Right now, that’s the line of credit. – G.P.
