Should I pay off home loans early?


Should borrowers pay off home loans early? There is no simple answer to that question. There will be a lot of opinions on the subject and everyone may be right for themselves. In general there are some situations when paying off mortgage is recommended, but it all depends on how old you are, what your plans for the future are, and what is your financial situation and investment interests.

Common Situations for Early Home Loan Repayment

  1. Repay your mortgage loan in full before you enter retirement years. Entering retirement free of mortgage debt means your income will not need to be supplemented in your early retirement years, even if it drops significantly. And as a qualifying senior you will be able to tap greater equity of your house if the mortgage balance on it is small or nonexistent.
  2. There are some people who'd rather invest the free cash they have rather than put into early mortgage payoff. Sometimes they have a higher return on other investment vehicles. Before you make a decision to invest your money in early repayment of the mortgage loan, retirement plans, or stock and bonds, compare your after-tax return on both.

There are borrowers who would also argue that there is no point in owning a home, and others who have a dream of achieving homeownership for themselves and their families. If being mortgage debt free is important for you, then repaying your mortgage is a most desirable action to take.

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