Should you pay off your mortgage as soon as you can? Yes.
Great, that should be the end of the blog; thanks for coming to our TED talk.
Ok, so it’s not that easy, but that’s the boiled down answer.
It seems to be the cultural understanding that a mortgage is a long-time service. The idea is permeated through popular culture, and when people take out a mortgage, they understand that it’ll generally take over 20 years on average to pay it off.
Do you know who loves this cultural understanding? The lenders. This thinking keeps the interest adding on to your loan and keeps them in record profits.
So, what are the pros of paying off your mortgage as soon as possible?
Besides the apparent debt-free lifestyle, paying off your mortgage early means that you will pay off less interest. Most mortgages compound interest daily and load the interest on the front of the loan, which means you spend a long time paying off the interest before you even start paying off the actual amount you borrowed. Paying off your mortgage quicker means cutting the interest that can accrue, thus saving you thousands.
Imagine what you could do with the money you put away each week for your repayments. How much more flexibility would that money give you in your lifestyle? Would you travel more? Save more for retirement? The amount of money you would be saving, you could do both.
Now that your home is yours, perhaps you want to use the more significant equity you have for an investment property or more in shares. Both are great options that will increase the chances of a luxury retirement.
One of the questions we get a lot, though, is about the cons of paying off your mortgage early. Are there any? Well, depending on your lender, yes. Some lenders understand that paying off your loan earlier is better for you and not them, so they put penalties on early payments or payments above an agreed amount. If your lender has these terms, it might be time to start looking elsewhere.
We think you’ll agree that there are many more pros than cons to paying off your mortgage early. Suppose you are looking for expert advice on how our Mortgage Action Plan (MAP) can get you on the pathway to Less Debt More Life sooner rather than later. Save thousands of dollars and years off your mortgage with a chat with our experts! Book a risk-free appointment today!