Every mortgage needs to be paid on time. But, premature or early payment is not good. These reasons for not paying off your mortgage quickly are wonderful.
Many of us have taken home mortgage to finance our dream home at times when we lack sufficient amount of funds.
Some of us are fortunate enough to arrange good amount of disposable income. This income is that is sufficient enough to pay off your mortgage completely.
Once you pay off your home mortgage, you will hit a financial milestone and get a peace of mind, freedom and a strong sense of security.
But, is it a wise decision to pay off mortgage as quickly as possible? No. Here’s a look at top 6 reasons for not paying off your mortgage too early:
(1) No Tax Advantages
It is one of the most unbeatable reasons for not paying off your mortgage quickly. It If you have a long term mortgage plan than a large contribution of your mortgage payments will go towards paying down the interest of your mortgage loan during first half of your long term mortgage payment plan.
The principal balance will decrease only a little from year-to-year. Paying off your mortgage loan early it means paying off principal of a tax-deductible loan.
Thus, it makes little sense to pay off your real estate investment loan and miss out the tax advantage on your taxable income.
The interest paid by you on mortgage debt can be deducted from taxable income in tax return every year. This greatly decreases the true interest rate of your mortgage.
It will be much better decision to pay off those debt instruments first which are non-tax-deductible in nature.
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