A great mortgage broker will have the necessary knowledge and experience in assisting clients with mortgage repayments and questions or concerns that may arise. If a client approaches their broker inquiring about if it is better to pay off their mortgage in full or keep it, the broker should be able to explain that paying off a mortgage early can result in various benefits and disadvantages, including the following:
Benefits of Paying Off a Mortgage
- Clients will own their homes outright which is an important goal for countless Australians
- Clients can save money on interest payments if the repayments are allocated to the home loan principal amount
- Clients will no longer have to pay monthly mortgage repayments, resulting in more monthly cash flow that can be allocated to other expenses
Disadvantages of Paying Off a Mortgage
- Clients can lose their potential for obtaining mortgage interest tax deductions, resulting in increased amounts of taxable income
- Clients can damage their credit scores by paying their mortgage in full due to the loss of credit
- Clients may be subject to facing mortgage prepayment penalties charged by their mortgage brokers due to paying a mortgage in full too early
If a client decides to keep their mortgage rather than pay in full, they can easily access funds in a home loan account to use for home renovations, resulting in an increased property value. Individuals interested in learning more about paying their mortgage in full should reach out to their current mortgage brokers for more information.