Mortgage is by definition a liability and therefore a debt. In my view, it is a question whether you have an asset on the other side of the ledger to balance or exceed that liability to define it as either "good" or "bad" debt.
Anytime someone is willing to lend you money at the lowest interest rates relative to other borrowing costs in order to purchase an asset that appreciates over the long term (it can be gold, stocks, house whatever), you do it. Furthermore, if they are willing to let you repay the cost to purchase that asset a little at a time and you simply have to repay it monthly, you do it.
In theory, over a 10, 20, 30 year timeframe, that asset should be increasing in value at least relative to inflation while the fixed low cost to borrow decreases again relative to inflation and what you pay down each month in principal.
Example du jour, uncle bought a house in San Francisco that forced him to work 2 jobs to just keep up with the mortgage payments. He was in over his head big time but paid the monthly amount and took the full 30 years to pay it off. He paid a lot in interest payments of course and couldn't afford or was unwilling to pay off it off quicker.
The year he bought was 1972 and the house was an outrageous $35K with a whopping monthly mortgage payment of a $150/month in the 6% range.
His first few years of mortgage payments took 2 full time jobs to pay off while the last payments in the early 2000s was less than his cable bill. Yes, he paid 3x as much in interest compared to the original borrowing cost so his total cost was ~120K for the principal plus interest (and orginal down payment). That house is worth north of $700K even in this depressed market.
Another way to look at it was his 'rent' was fixed at $150/month for 30 years plus property tax and maintenance costs and in the end, he gets $700K asset for his troubles.
That looks ridiculously low and of course, people will say it is different now or it is SF RE but to me it illustrates the power of inflation and having a fixed cost over the long term is very beneficial to the bottom line.
One of the greatest financial innovations since WWII is the 30 year fixed loan which existed in Canada (25 year fixed rate actually) till the 70's when the banking oligarchy figured out they were the ones bearing the entire risk and decided to pass it on to the Canadian consumer via the unfriendly consumer product called variable rate mortgage or the US equivalent ARM.
It probably makes sense to pay off a mortgage in Canada more quickly since the consumer has full interest rate risk or pay dearly for the "security" of a 10 year fixed but I haven't looked at it enough to make that call. In the States, the 30 year fixed, the bank takes the full interest rate risk. Or put another way, my uncle's bank was not making money on his 6% loan in the early 80s with interest rates in the mid teens. In Canada, my parents weren't so lucky and remember my dad rejoicing over his 11% 5 year "fixed" rate in '89.
I'm keeping my 30 year fixed mortgage and we'll see what happens in 2033 about whether it was a good idea not to pay this loan faster and letting inflation doing the heavy lifting for me.
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