When Does Aggressively Paying Off Your Mortgage Make Sense?
Everybody wants to tackle their debts in a timely fashion, even early whenever possible. This is especially true of the heftiest debt that many people will encounter in their lives: Their mortgage. Paying off one’s mortgage is a tremendous undertaking, and it’s not hard to see why a person would want to eliminate their loan payments sooner than the term of their mortgage entails. Visit: https://askross.ca/
Everybody wants to tackle their debts in a timely fashion, even early whenever possible. This is especially true of the heftiest debt that many people will encounter in their lives: Their mortgage. Paying off one’s mortgage is a tremendous undertaking, and it’s not hard to see why a person would want to eliminate their loan payments sooner than the term of their mortgage entails. Visit: https://askross.ca/
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<strong>When</strong> <strong>Does</strong> <strong>Aggressively</strong> <strong>Paying</strong> <strong>Off</strong> <strong>Your</strong> <strong>Mortgage</strong> <strong>Make</strong> <strong>Sense</strong>?<br />
Everybody wants to tackle their debts in a timely fashion, even early whenever possible. This is<br />
especially true of the heftiest debt that many people will encounter in their lives: Their mortgage. <strong>Paying</strong><br />
off one’s mortgage is a tremendous undertaking, and it’s not hard to see why a person would want to<br />
eliminate their loan payments sooner than the term of their mortgage entails. Why would anybody want<br />
to be stuck with a debt for a moment longer than they have to?<br />
Sometimes, though, aggressively paying off one’s mortgage is not the most sensible thing to do. While it<br />
can be ideal in a great number of circumstances, it’s worth understanding that each circumstance is<br />
different and requires a different approach.<br />
<strong>When</strong> <strong>Paying</strong> <strong>Your</strong> <strong>Mortgage</strong> <strong>Off</strong> <strong>Aggressively</strong> <strong>Make</strong>s <strong>Sense</strong><br />
If you plan to stay at the house that you’re paying off.<br />
If your intention is to make your new property your long-term or permanent residence, it makes a lot<br />
more sense to aggressively pay off your private mortgage than if your goal is to move on to somewhere<br />
new later on. In the event of wanting to buy another property after paying off your latest property, the<br />
money that you could be spending on aggressive mortgage payments is likely better off in a savings<br />
account for your future investment.<br />
If saving money on interest is a part of the game plan.<br />
Everyone wants to pay as little as they can on interest, and aggressively paying off one’s mortgage is a<br />
surefire way to do that. In fact, this is the most popular reason for tackling one’s mortgage early on.<br />
Each mortgage loan consists of the principal (the amount initially borrowed) and interest that is added<br />
on top of the monthly cost of your mortgage payments. The longer the duration of your mortgage is, the<br />
more you will be paying in accrued interest. Knocking out payments early drastically reduces how long<br />
the mortgage will withstand and can save you thousands of dollars in interest payments.<br />
<strong>When</strong> <strong>Paying</strong> <strong>Your</strong> <strong>Mortgage</strong> <strong>Off</strong> <strong>Aggressively</strong> Isn’t The Best Move<br />
<strong>When</strong> you have a home-based business.<br />
If you are self-employed with a home-based business, any interest that you pay on your mortgage is tax<br />
deductible. So you’re actually reducing your taxable income by not furiously chipping away at your<br />
mortgage debt.<br />
If you intend to make other investments.<br />
<strong>Paying</strong> off your mortgage at a breakneck speed is great, unless that money could be better used toward<br />
your future investment plans. If your aim is to buy another property or make another large-sum<br />
investment, it’s usually worth holding onto that extra cash and putting it aside for the future.<br />
How You Can <strong>Aggressively</strong> Pay <strong>Off</strong> <strong>Your</strong> <strong>Mortgage</strong> Debt<br />
Place as large a down payment on the property as you can.<br />
Many Canadian home buyers pay an initial down payment of 10% to 15% of the home’s value. If you can<br />
pay 20% or more as a down payment, you’ll owe substantially less and end up paying less in interest as<br />
well.
<strong>Make</strong> lump-sum or additional payments.<br />
Extra mortgage payments go directly to the principal, the initial amount borrowed for the mortgage in<br />
the first place. If you can arrange annual prepayments of any percentage, or increase your monthly<br />
payments by even a hundred dollars, you can save thousands in the long-term while paying off your<br />
home more quickly.<br />
Is It Worth It To Pay <strong>Off</strong> <strong>Your</strong> <strong>Mortgage</strong> <strong>Aggressively</strong>?<br />
There is no yes or no answer to this question, as it all depends upon your circumstances. Many home<br />
buyers find the answer to be “yes,” especially if they intend on settling down for life (or at least an<br />
extended period) in their home, particularly if they do not plan to operate a business out of it.