Honestly if you’re paying a mortgage at current rates, 6 months income is an excessive amount to hold out. Assuming that’s $100k, you’re paying somewhere around $5600/year by not paying down your mortgage more aggressively.
I have a lot of sympathy for someone who’s plan for savings was “if I get fired I can”:
(1) use my severance money
(2) sell my stock
(3) get a loan against my home
Only blackout periods blocked (2) and falling home prices blocked (3).
Because there isn’t a lot of good options for a high return investment so the inflation is lowering the value of your money quickly and using it to reduce interest payments makes a certain amount of sense.
Does the US not have Mortgage Offset Accounts? An offset account is essentially a normal transaction account tied to your mortgage, but every dollar in the account "offsets" the mortgage balance for daily interest calculations. My "emergency fund" is just in one of my offset accounts, so it's saving me on my mortgage interest.
This sounds like a useful banking product but unfortunately in Canada and the US they mostly try and get us to pay the mortgage quicker and then borrow money back at a higher rate if we need to. I think this product would lead to people not using other loan products and never overpaying on their mortgage (why would you if you can offset the interest?)
It’s not really the same, that sounds like “redraw” here where you put more money into the loan but you can take it out again. Offset has all the benefit (reduced interest payments), with total flexibility. You can clear out your offset accounts anytime without penalty (redraw usually attracts a fee)
I have a lot of sympathy for someone who’s plan for savings was “if I get fired I can”: (1) use my severance money (2) sell my stock (3) get a loan against my home
Only blackout periods blocked (2) and falling home prices blocked (3).