What’s the general strategy for people there? Pay it down over time, pay off ASAP, or remortgage (like some in the USA) when the need for disposable cash is nigh? I assume the same as USA applies, that it’s the actual interest paid, so the deduction amount drops over time as the balance owed goes down, for the same level of monthly payment - essentially raising the out-of-pocket mortgage cost.
I’ve never paid enough in interest to take the deduction.
Yes, it works the same way as you describe. People do refinance sometimes for a better rate. The new rate also goes up and down, but at a lower level. But you have to check, because they might increase it more than the general interest rare. In that case, you just refinance again with another bank. Fees are usually low.
Most people pay it down over time. Some pay extra when the interest rate is low, so that the outstanding amount is less when the interest gets higher. Lots of talk in the media that this is a good strategy.
There is also talk in media about whether you should switch to a fixed rate whenever the rate is increasing, but it’s already baked into the rate, so it’s seldom profitable. Some people switch to a fixed rate and get stuck with it as the rate decreases.
It is also common to refinance and increase the loan amount to renovate your home or buy a car, since the interest on a car loan would be higher.
And a few people, such as myself, are paying interest only (after having enough equity) and put it in index funds instead.