Should you Pay off your Mortage Early

Until your mortgage is paid off in its entirety you never completely own your own home as the lender holds it as security against your debt. If you can pay off your mortgage early then the biggest asset you most likely own is truly yours, and you are no longer paying interest to the lender on your investment. The prospect of foreclosure will never rear its head.

Arguments may abound about the benefits of claiming tax relief on mortgage interest payments but they really cannot outweigh the financial security of owning your own home outright. I have never regretted clearing my own mortgage in full, twelve years early, and still believe it was a wise move.

Anyone who would like the freedom of being mortgage free should consider a shorter term mortgage to begin with and always look for a capital repayment mortgage so the principal is reduced. Endowment linked mortgages do not reduce the principal owed and often fall short of paying off the full principal when they meet maturity. If your aim is to clear the mortgage early, choose a home loan which allows you to over pay against the principal whenever you can, without any kind of penalty being imposed.

Some argue that if you concentrate on paying off your mortgage then you lose out on other investment opportunities. However once the mortgage is clear one can simply use the funds which would have been used monthly towards the mortgage as investment funds. Alternatively it is possible to both pay the mortgage and use the proceeds from any investments made in the short term to clear the mortgage principal early. Every over payment on the mortgage principal reduces the total amount of interest paid and thus saves you more.

Mortgage terms offered in the US are frighteningly long with mortgages which extend over a persons lifetime being carried. It is far better to borrow less over a shorter term and make a good down payment than over extend oneself and be able to do nothing more than make the monthly payments.

Property has always proved to be a good long term investment. If you are mortgage free then it is possible to cash in on your asset and take out the full equity value when prices are high and bank your profit, or reinvest in other property with cash.

If you do aim to pay off your mortgage early it brings additional benefits with it. Those who do have such an aim are less likely to carry other forms of debt and can thus be in the enviable position of only needing to meet living costs without loan repayments or credit card debts. Such an ambition requires personal discipline and not succumbing to credit card temptation but it also means the security of living within ones means without the burden of any debt.

Whilst it invariably involves frugality in many areas of spending it does not necessarily mean living a miserable existence simply doing nothing but working to pay off the mortgage early, as the person who does aim to be mortgage free early is more likely to learn how to become financially savvy and spot good investment opportunities. It can bring great personal satisfaction knowing that you played outside the system and came out debt free at the other end with a home which is paid for in full.