Should you pay off your home mortgage loans? 🤔
If you have been following our blog for a while, you would have known that we have been been making partial payments to our mortgage loan.
There’s two camp debating if it is worth it to pay off the home loan.
The ❌ NO ❌ camp
Keep the cash, don’t pay back the loans
🙅 it is more worth it to invest the money. You can get higher returns.
If you are confident of getting more bang for your bucks, it is definitely a good use of your money.
🙅 what if you need the money. Making payment to home mortgage loan is irreversible.
If there is an emergency tomorrow, money in the bank would be a wiser choice as you have liquid cash flow.
The ⭕️ YES ⭕️ camp
Pay off the loan, I hate debts
🙆 Mortgage interest is too high and I don’t know how to get higher returns than it.
If your investments are not returning you higher interest than your mortgage, it is time to rethink the usage of your money.
🙆 I want a peace of mind. No worries about getting retrenched tomorrow.
With the unstable economy and constant news about retrenchment, there is no guarantee that you will have a job few years down the road.
🙆 CPF OA account has too much money without any purpose.
CPF OA monies cannot be taken out. If the mortgage interest is higher than the CPF OA, it may be a good option to use it to pay off the mortgage loan.
Which camp are you on?
Read about our thoughts in our blog ➡️ https://sharehook.com
Deciding whether to pay off your home mortgage early is a common dilemma. From my experience, it really boils down to your financial priorities and comfort with risk. If you lean towards investing, keeping your cash liquid can offer flexibility during emergencies or sudden expenses. For instance, having accessible funds meant I could handle an unexpected job loss without stress. That said, it’s essential to compare the mortgage interest rate with potential investment returns. If investments consistently outperform the interest you owe, investing makes sense. On the other hand, paying off your mortgage early can provide tremendous peace of mind. For me, clearing debt reduced financial stress and gave a sense of security, especially in uncertain economic times with layoffs becoming frequent news. Additionally, if you have surplus funds in accounts like CPF Ordinary Account (OA) that earn lower interest compared to your mortgage rate, channeling those funds to debt repayment could optimize your finances. Remember, early mortgage payments are typically irreversible, so ensure you retain an emergency fund for liquidity. Ultimately, the 'right' choice depends on your financial goals, risk tolerance, and need for security.
