Melanie Nutbeam answers basic personal finance and investing queries

This is the start of a weekly series where Melanie Nutbeam, a certified financial planner based in Hong Kong, addresses common personal finance queries. Send queries to [email protected]

Paying off your mortgage is essentially a no-risk investment. You will achieve a guaranteed return equal to your mortgage interest rate - currently 2 per cent to 3 per cent, depending on your loan arrangement. That's not nothing.

Hong Kong interest rates have already crept up from the 20-year low of 0.9 per cent reached early last year and, as this creep continues, you will benefit from early, lump-sum mortgage repayment.

In so doing, you might be able to cut your monthly mortgage bill or bring forward your loan maturity date. You'll need to ask your bank what your options are, and whether there are any penalties for early repayment. You can also ask the bank for a calculation showing the savings you would make by paying off your mortgage, as these can be significant when calculated over the life of the loan.

On the other hand, the 2 per cent to 3 per cent cost of your mortgage provides, in effect, a cheap loan. If you are prepared to take on some risk, you should, over the medium to long term, earn enough from investing in growth assets to outstrip the cost of your mortgage.

In other words, it might make more sense to invest spare cash in the market, rather than use it to pay off the mortgage.