Is Early Mortgage Repayment a Beneficial Option for You?

Is Early Mortgage Repayment a Beneficial Option for You?

The benefits of early mortgage repayment are well known. You will save on interest payments. You will gain more equity in the house more quickly. You will not risk losing your home in the long term. However, you have to ask yourself whether this is the best of all options that you have available. Use the following set of criteria to decide.



Does the size of your income allow you to make additional mortgage payments for the purpose of early repayment? There is no point in allocating resources towards this loan if this will lead to financial restrictions for you and your family. If you have extra income, you can readily try this strategy, but this is not always possible.


You need to consider your expenses in order to decide on whether to go for this strategy. If they are growing, then you will most probably find it difficult or impossible to repay your home loan early. It is common for the expenses of working adults to increase over time especially if they have children.

Other Debt

It is always best to repay any other debt before paying your mortgage debt. This is because credit cards and other personal loans like car loans have much higher interest rates. By repaying them first, you will save a lot more. Besides, in many cases home loan interest is tax deductible while the interest on personal loans is not. This will generate further savings for you in case you decide to pay off other debt first.


There are various saving aspects to look into before you decide to repay your mortgage early. Firstly, you need to check whether you have sufficient emergency funds. If you don’t, then you may want to allocate some extra income towards your savings account.

The second aspect to consider is whether you plan to make a major investment in the short to medium run. If you save for your kids’ college education, for instance, then you may find it more financially beneficial to allocate extra income towards these savings. You simply need to do the necessary calculations to decide which option is best.

Another important factor to consider is the interest which you can get on the funds in your savings account. If it is higher than the interest rate on your mortgage, then you will certainly be better off saving rather than paying off the loan. The idea is that you have to utilize any extra money in the most effective way possible.


When you pay off your home loan early, you will get an extra amount of disposable income every month afterwards. However, this extra income will not be sufficient for buying the same things that you would buy with it today because of inflation, which is following an upward trend. Hence, the value of your savings may dwindle with time. It is essential that you take this factor into account as well.

In conclusion, if you decide to go for early mortgage repayment it is best to devise and follow your own plan. Avoid committing to a program like the biweekly payment one as this may put you at greater risk of default.

By   Daniel  Austin

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