Question:

How do I decide on mortgage partial prepayment vs repayment in full?

Answer:

Mortgage partial prepayment vs. repayment in full requires two completely different strategies. While mortgage partial prepayment is recommended to everyone, especially senior citizens, and especially if the level of return of some financial assets is lower than mortgage loans, mortgage repayment in full requires significant asset liquidation.

Making the decision to fully pay off a mortgage requires that you play a little bit with interest rate scenarios for different investment vehicles.

Mortgage partial prepayment affects fixed and adjustable rate mortgages differently.

Paying off a fixed rate loan early results in shortening your amortization period and reducing overall interest cost of the loan but the monthly mortgage payment will remain the same; while partial mortgage pay off for an ARM loan results in reducing the monthly payment but the amortization schedule and payments will be recalculated every time for the remaining loan term.

Contact your financial advisor if you have any other specific questions about mortgage loan partial prepayment and repayment in full.

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