Should You Pay Off Your Mortgage Early? - Part One (The Pros)
As a homeowner, one of the biggest financial decisions you’ll make is whether or not to pay off your mortgage early. With interest rates the highest it’s been in years, it’s a question that many Canadians are asking themselves.
Picture it: You have a $200,000 balance on your mortgage, and it’s coming up for renewal in June. Thanks to an inheritance or a huge bonus or a great stock investment or a smart crypto bet, you have enough cash on hand to pay it off and live mortgage-free.
But should you pay off your mortgage early?
In this blog, we’ll explore the pros of paying off your mortgage early and provide insight into the tax and mortgage implications you need to consider. Next week we’ll explore the cons and you can decide for yourself what is the best decision to make based on your risk tolerance.
Reasons to Pay Off Your Mortgage Early
Lower Interest Costs
By paying off your mortgage early, you’ll reduce the amount of interest you’ll pay over the life of your mortgage. This can save you tens of thousands of dollars in interest payments (or more), especially if you have a long amortization period.
For example: If you have a $500,000 mortgage with a 25-year amortization and a 4% interest rate, you’ll pay $226,467 in interest. If you can pay off your mortgage early, that’s an extra $226,467 you can use to invest elsewhere.
Increased Cash Flow
Once your mortgage is paid off, you’ll have extra money each month that can be used for other purposes – investing, saving for retirement, paying down debt or upgrading your lifestyle. For example, if you have a $2,500 mortgage payment each month, paying off your mortgage could provide you with an additional $30,000 per year in cash flow.
Peace of Mind
Owning your home outright can provide a sense of security and peace of mind that can be difficult to achieve when you have a large mortgage payment to make each month. There’s no stress about what’s happening with interest rates, and you’ll be less worried about losing your job.
There are no wrong decisions when it comes to deciding whether or not you should pay off your mortgage early. The reasons to pay off your mortgage early might not be enough to sway you!
Stay tuned for next week when we dig into the cons that come with paying off your mortgage early.
Thanks for reading today’s BLOG!!!
Brian Kondo
Sales Representative / Team Leader
The Brian Kondo Real Estate Team
Re/Max Hallmark First Group Realty Ltd.
905-683-7800 office
905-426-7484 direct
brian@briankondo.com
www.BrianKondo.com
www.BrianKondoTeam.com
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