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When Does Aggressively Paying Off Your Mortgage Make Sense?

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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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When Does Aggressively Paying Off Your Mortgage Make Sense?

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

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