Do you remember the very first day after buying your home? You are usually overcome by two big emotions. You feel great because you’re finally on the properly ladder and you now have a place to call your own. At the same time it’s perfectly normal to feel a little scared because you’ve just taken the biggest loan you’ll ever have hanging over your head unless you upgrade to a bigger home as you get older.
Over the years I bet your mortgage has become a nuisance. You wouldn’t trade your home for the world, but you start to feel sick of looking at all the money leaving your bank account each month. The fact a lot of it is interest can be even harder to take. Some people finally decide they will pay their mortgage off early, so we’ll look at why it might be a good idea plus a few reasons why it could be a bad move.
The interest will disappear
If you do pay your mortgage off early you’ll not be able to stop smiling because the interest payments will cease immediately. It’s probably better not to count how much you’ve paid over the years. Do you have any idea how much money you’ll end up saving? If you paid interest for the full course of the mortgage it would amount to a small fortune. You will finally get to keep that money all to yourself instead of handing it over to your bank.
You’ll have peace of mind
It’s heart-breaking listening to stories of how people have been kicked out of their homes. Due to unseen circumstances lots of people get to the stage where they can’t afford to repay their mortgage. The home they live in technically isn’t even theirs, but once you pay off your mortgage your home will finally belong to you. You will be free to think about growing old in your home because nobody will be able to take it away from you.
You’re free to spend
The money you earn each month doesn’t matter in the grand scheme of things. The only thing that matters is how much you have left after all your essentials are taken care of. This will include things like your pension contributions and your bills, but your mortgage will be your biggest expense. Once you are mortgage free you’ll have a lot more freedom because even if you go overboard you know you still have a home to live in at the end of the day.
There are some negatives
Don’t run to the bank to hand over your savings just yet because there are some negatives you need to be aware of. If you invest your money properly you could make even more money. I know it sounds scary, but it is possible if you do it right. Another huge negative if the fact you won’t have as much cash in hand in case you run into trouble. You might also have to pass on a great opportunity because you don’t have enough money to jump on it. Not having a mortgage isn’t as rosy as it sounds.
It comes down to you
Before you make any big decisions you should definitely seek financial advice, but when all is said and done you’re the only one who can decide what to do. Maybe some of the pros or cons we’ve spoken about today have jumped out at you. It’s a win-win situation because even if you throw your savings into your home you will have a powerful asset. One final tip is not to think about paying off your mortgage until you get rid of all your other debts.
This article is contributed by Jenny Wadlow, a professional freelance blogger. She writes articles for First World Mortgage, providers of the best mortgage rates in Connecticut. Jenny is an art lover and is frequently seen at all the latest exhibition openings.