Get Ahead in Life by Paying Extra to Principal
Homeowners often dread the first of the month as they know that large house payment is due. There are many others that relish in the idea. Why would they do that? I can tell you I am one of them and that is because I pay extra to principal and that gives me the piece of mind that I will own my home sooner, saving me money.
There is a strategy to this though. You should not just go and take every spare cent and start sending it off to your mortgage. If you have other outstanding debt that has a higher rate you should work on paying that down first. It would also be a good idea to have a cushion in savings.
If you read about this subject you will run across many opinions on what you should do. While researching this blog I read many of them. One of the common diseenting opinion is the tax benefits. Yes mortgages do provide you with tax benefits but standard deductions for married couples are $11,400 therefore unless you can claim more interest than that there is no additional benefit. Obviously consulting with a tax professional is the best way to research what is the right move for you.
One positive way to look at paying down your mortgage early is to view it as part of your investment in the future. By paying it down early you save on interest which pays you back down the road. Just think about not making your mortgage payment for 5-10 years? That is quite a bit of money that you can reallocate to vacation, a new car, or your savings.
Some investors will point out that the house is not a liquid asset and in the recent economy has proven to be not as reliable of an asset as it was once viewed. These are both important facts to consider and that is why diversification is important when it comes to your financial success. Speaking with a trusted financial advisor is your best move and will get you on the right track to financial freedom.
Use our mortgage calculator to see if you are on the right track. Stop by one of our branches to speak with a mortgage professional. To stay up to date with Standard Bank like us on Facebook.