I will be purchasing a property soon, so my question is the following:
Do I pay off my mortgage off as soon as possible (by paying more every month) or do I put the same amount extra into some unit trust?
This may sound like an easy question, as I am expecting the "You can't save when you have debt" response, however my thinking is slightly different here.
For arguments sake, the mortgage's minimum payment is only 30% of my salary, over the years that percentage will drop, ie in 5 years time, it will only be 20% of my salary.
And to top that off, the value of money depreciates over time(thus they have the interest rate, etc), so if I had to pay 5000 units per month now, in about 10 years 5000 units will be less worth to me.
So which way is best to pursuit?
At the moment, the mortgage would be over 20 years at a ridiculous interest rate of 9.0% (on average our bond interest rates in South Africa are between 8.5% - 12%)