Let’s say you’re at a point in your life where you have more than enough money on your hands. It would be nice if you pay off your mortgage early, right? After all, who doesn’t want to become debt-free?
Even if you’re not really in that state of comfortability or financial stability, you probably have already wondered for a time or two about how it would feel like to be able to pay off your mortgage early.
Everyone could agree that if you’re planning to do so, you need to think about every possible outcome before you actually make a decision. To date, there is a lot of discussion over whether or not it’s really worth doing.
With that in mind, you need to understand the pros and cons of deciding to pay off your mortgage early. You will be able to see for yourself if it’s really worth it.
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What are its advantages?
To help you come up with a decision, get to know the advantages first.
1. You’ll see that you’re going to have a significant amount of savings on long-term interest cost. You just have to make sure that you’re playing your cards right.
2. Your credit standing could improve if you decide to pay off your mortgage early. Having less debt would look good when checking your creditworthiness.
3. You’ll have some peace of mind when you retire because you will have lesser financial burden by the time you reach retirement. It’s proof that being debt- free will definitely pay off in time.
What about the disadvantages?
On the other side of the spectrum, you have to learn about its disadvantages, too. Here are some of the drawbacks if you will pay off your mortgage early.
1. You won’t be able to enjoy tax write-offs or mortgage interest deductions if you decide to pay off your mortgage early.
2. Two words: Prepayment penalty. Some mortgages will require borrowers a prepayment penalty fee to be paid to the lender.
3. You’ll miss out on other ways to put your money to good use. There are other smart ways to make the most of the extra money that you have. Other than paying off all your debts, you can use it by investing it in the stock market or start a small business.
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How can you pay off your mortgage early?
If you’re really set on paying off your mortgage, there are ways to do so.
1. Make biweekly payments. That means you’ll make a total 26 weeks within the year. That means you’ll end up paying more in a year compared to paying it monthly.
2. Top up. Since having extra money on your hands made you decide to pay off your mortgage early, you can do so by paying more than what you have to every month.
3. Employers receive different kinds of bonuses in the workplace every year, whether it’s mandated or performance-based. If you don’t want to top up every month, you can use your bonuses to pay off your mortgage early.
It’s up to you
Deciding on whether or not you should pay off your mortgage early should definitely come from you. When you choose, you need to put your best interests first. Therefore, you need to come up with a decision that’s best for you and your home.
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