The Pros and Cons of Paying Off Your Mortgage Early (Financially Explained)
The Benefits of Mortgage Repayment Early
1. Avoid Interest Costs of Thousands
Mortgages typically last between 15 and 30 years. Interest can total tens or even hundreds of thousands of dollars over that period. The more quickly you pay off your debt, the less interest you will pay overall.
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As an illustration, consider a $300,000 mortgage with a 30-year term and an interest rate of 6.5%:
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Over $380,000 in total interest over 30 years
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Early repayment could result in interest savings of tens of thousands
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Interest rates decrease as principal is lowered more quickly
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2. Get Rid of a Significant Monthly Cost
When you pay off your mortgage, you have more money for what is probably your biggest monthly payment. This gives greater freedom to:
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Retirement savings
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Making other investments
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Taking a hiatus from your work or moving to a less lucrative but fulfilling job
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Taking the strain off your household’s finances
Your monthly housing expenses drastically decrease when you don’t have a mortgage; all that’s left are taxes, insurance, and upkeep.
