The Reasons to Pay Off Your Mortgage Early

You have recently bought your dream home. For this, you had to borrow money from the bank at an interest rate. You were advised to go for a longer repayment period to bring down your EMI, which would ease up your monthly outflow. A friend explained to you the advantage of this would bring you in terms of tax break. Therefore, you were convinced to take the right decision. Think again! While things may seem rosy in the near term, as lower EMI allows you to maintain your extravagant lifestyle. In the longer term, this may not be the case. Here, we explain to you why it is good to pay off your mortgage the sooner the better.

Save on interest paid

It is a common practice to buy a home on loan with long payoff periods such as 15, 20 and 30 years. While on the surface level it means paying lower EMIs, if you delve deeper into the math, many of you will be surprised at the amount of interest you end up paying in the process. The longer the tenure, the higher the interest paid. You can check this for yourself using the mortgage repayment calculator. One may argue about the tax break factor. However, the reality is that what you save in terms of tax is often less than what you pay in terms of interest to the bank.

Financial freedom

Paying off your home debt gives you the peace of mind of owning your house free of debt. The worry of owing money to someone is emotionally stressful and may have an adverse effect on one's health, causing migraines, insomnia, heart attacks, ulcers and severe anxiety. It may even cause performance issues at your workplace, as you constantly suffer from the fear of 'What if I lose my job?', 'How will I pay off my debt?' Once you pay off your debt, all these fears go away and you regain your self-confidence.

Risk reduction

The longer you stay on a loan, higher the chances of your risk. With time, risk of inflation, higher interest rates, change in policies and other such factors may start playing a crucial role in increasing your loan. This in turn, may increase your risks of losing your home. However, once you have paid off your mortgages, you have higher investment capacity and the capacity to take more risks in equity, where your money will grow.

Now that you have three good reasons to pay off your mortgage early and wondering of ways to do it, seeking help from your financial advisor is a good move. You can also approach services that provide debt assistance. Leaving under a roof that is debt free will always bring sweet dreams.

If you need other brilliant tips and suggestions about home loaning, just contact salt finance. Salt Finance is a boutique home loan & car loan specialist helping hard clients to get a better deal, save interest and own their homes sooner. We are located at Mortdale, NSW. Salt Finance is ready, call us now!