An Australian real estate investor has sparked a heated debate by declaring that ‘paying off your mortgage is stupid’.
Jack Henderson, 28, bought his first property at 18 while working in construction and living at home in western Sydney.
Three years later, in 2020, he moved to Newcastle and opened his buyer’s agency, Henderson Advocacy. Now, he owns 15 properties.
Taking to social media this week, Mr Henderson said that ‘real estate is one of the best long-term investments, but there’s one major thing people overlook’.
‘Everyone knows a Nan and Pop or an aunt and uncle who have lived in the same house forever. They bought it for $500,000, and now it’s worth $5million,’ he said.
‘Those family members spent decades trying to pay off their mortgage. They used 50 – 60 per cent of their income to chip away at the debt, focusing on reducing it to zero.
‘Meanwhile, the property naturally appreciated in value, turning a modest purchase into a life-changing amount of money. The real wealth wasn’t created by paying the debt down to zero, it came from the property increasing in value.’
Mr Henderson said that while the property market has booms and busts, history has shown it’s a safe bet that real estate will increase in value over the long term.
He argued that rather than trying to pay off one house, a smarter move would be to use the equity to get another loan to buy a second property, or a third or fourth, and then ‘let time do the heavy lifting’.
Jack Henderson (pictured) claimed in a post to social media it is ‘stupid’ to pay off a mortgage and that getting into more debt to buy additional properties would build wealth long term
Mr Henderson runs his property buyer’s agency based in Newcastle
Mr Henderson said that while buying multiple properties would involve getting into more debt, over the long term the buyer would be in a better position, provided they can make the minimum repayments.
‘The more assets you hold, the more exposure you have to long-term property growth,’ he said.
‘Debt isn’t something to fear. It’s something to use strategically. Wealthy people don’t focus on eliminating debt, they focus on managing and leveraging it.
‘When you hold multiple properties, you’re not just benefiting from capital growth on one asset, you’re compounding your growth across multiple assets. That’s how generational wealth is built.
‘Most people see debt as a burden. They work tirelessly to eliminate it, But if you shift your perspective, you’ll realise that debt is a tool that can accelerate your wealth if used correctly.’
Mr Henderson was flooded with comments saying the advice was reckless and could send people broke and homeless.
‘Literally no one thinks paying off your mortgage is stupid,’ one said.
‘This is all good until you can’t afford to pay interest and the bank takes it all back,’ a second added.
‘This is scary stupid. Doesn’t at any point mention the risks of carrying debt or the freedom of having a paid off home,’ another said.
‘So people can just afford the mortgage on multiple properties? This is dumb,’ one commenter asked.
‘You put tenants in and they pay the mortgage for you,’ another commenter replied.
‘Buy properties that would give you a good rental income that the majority of people can afford. For me, there’s the capital growth plus the annual income from rent that makes property investment a no brainer,’ agreed another.
The property guru himself rents a flat in Sydney’s eastern suburbs but would never dream of purchasing in the suburb because it’s too expensive
‘Or you could pay it off early, not have 10 years of paying interest. Take your (former) mortgage payment and invest. The average person will miss payments, then loans get called on them and they file bankruptcy,’ another warned.
One commenter said Mr Henderson’s advice did not reflect the peace-of-mind that comes with being debt-free.
‘What a pleasure to sit down with a cuppa and realise that we don’t have to pay $3,000 to the bank a month for the house loan. This money is all ours to do whatever we fancy,’ they said.
One property investor said the advice also did not take into account the significant taxes and charges that come with buying and selling properties.
‘When an investor wants to ”realise” the equity in these properties, the tax office will absolutely smash them and swallow up half of their profits with capital gains tax,’ they said.
‘Personally I’m only interested in buying property I’d be happy to retire into so you can move into your investment.’