So you have purchased a home, you’re steadily paying off your mortgage… so what’s the next step? Should you pay off your mortgage as quickly as possible? Or should you consider other investment opportunities outside of your home loan to generate wealth? Many homeowners ponder this question when deciding on a wealth building strategy, and the answer is bound to be different for each person, based on their personal circumstances, risk tolerance and finance objectives. So, let’s explore the benefits and drawbacks of both paying off your mortgage early, and investing in other assets.
Is it smart to pay off your mortgage early?
There are several reasons why people choose to pay off their mortgage as quickly as possible. Below are some of the benefits of choosing this course of action:
It is important to note that depending on the loan you have, there may be restrictions, or fees associated with making extra mortgage repayments.
Are there disadvantages to paying off a mortgage?
Becoming debt free is an appealing concept, however paying off your mortgage quickly may mean missing out on other investment opportunities that could yield high returns. Below are some of the downsides to paying down your loan as quickly as possible:
What are the pros of investing rather than paying off your mortgage?
For those interested in investing their excess savings as opposed to using the funds to make additional mortgage repayments, here are some benefits of this strategy:
What are some important things to consider when it comes to investing?
There is a lot to consider when it comes to deciding on a wealth building strategy. Everyone’s financial circumstances, objectives and risk appetites vary, so it is important to make decisions based on your personal situation. If you’d like to learn more about some of the lending options available to you, reach out to one of our MoneyQuest finance specialists.
Disclaimer:
This article is written to provide a summary and general overview of the subject matter covered for your information only. Every effort has been made to ensure the information in the article is current, accurate and reliable. This article has been prepared without taking into account your objectives, personal circumstances, financial situation or needs. You should consider whether it is appropriate for your circumstances. You should seek your own independent legal, financial and taxation advice before acting or relying on any of the content contained in the articles and review any relevant Product Disclosure Statement (PDS), Terms and Conditions (T&C) or Financial Services Guide (FSG).
Please consult your financial advisor, solicitor or accountant before acting on information contained in this publication.
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