In today’s economy, most people are facing challenges when it comes to their mortgage payment. In fact, some are left with almost nothing when they make their monthly payments. If you are torn between paying off your mortgage or saving for retirement, consider the following benefits of extra mortgage payments and then make an informed decision.
Long-term Financial Security
One of the biggest advantages of paying off your mortgage is acquiring long-term financial security. Without a mortgage looming over your head, you can enjoy both financial security and building wealth for the future.
Also, if you save the money you were previously using to pay off your mortgage, you can build an emergency fund or a comfortable nest for retirement. Apart from that, if you encounter a tight financial situation, you will have less bills to pay.
Also, you’ll never need to worry about losing your home due to a bank foreclosure.
Minimizes Retirement Expenses
As a homeowner, if you are preparing for retirement, there is a high chance that you want to reduce retirement expenses as much as possible. When you consider that monthly mortgage payments take up to 30% of your pre-retirement income, paying off your mortgage will free up this money.
Without the heavy burden of a mortgage payment you are better prepared when it comes to retirement. Also, paying off your mortgage gives you the flexibility. You can then decide how you want to spend your money after retirement. Plus it will be easier to keep your household afloat.
Peace Of Mind
When you have a mortgage to pay, you will never rest easy. The mortgage payment is usually the first thing on the list for many homeowners.
If you default on your mortgage payments, you can easily lose your home and end up with a poor credit history. On the other hand, if you have already paid off your mortgage, your family is assured of a place to live.
Paying off your mortgage takes considerable weight off your shoulders. It also gives you a reason to feel confident and secure while enjoying peace of mind.
Reduces Interest Payable
If you check your loan documents you will see the total cost payable during the entire duration of your loan. Even if your loan has a lower interest rate, you will still end up paying almost the same amount of interest as the principal amount borrowed.
However, if you have a loan repayment duration of 10 years and you repay it in 5 years, you will avoid almost half of the interest charges. You can then channel the money you have saved to other important financial obligations in your life such as investing.
Flexible Monthly Budget
Once you have finished paying off your mortgage, your monthly budget will have some breathing space. For instance, if you were struggling with some bills you will find it easier to make the payments on time.
If you had made some financial sacrifices for yourself or your family, you will now find it easier to afford them.
Final Thoughts On The Benefits Of Paying Off Your Mortgage
Paying off your mortgage offers numerous benefits. It frees up your cash, gives you an opportunity to save and invest and you can enjoy a comfortable retirement.
Considering today’s tough economic situation, paying off your mortgage will always be a smart move.