I’m stuck in between paying my off my mortgage loan and investing my money. I don’t know which I should do first.
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I’m stuck in between paying my off my mortgage loan and investing my money. I don’t know which I should do first.
I would suggest you invest the money somewhere. I agree that paying off debt would help you to have one less worry. But if you have the opportunity to earn a higher return on your investment than interest payable then you should invest it and pay the interest using the returns generated from your investment.
The investment makes sure that your money is used for creating wealth and is personalised to your needs. The returns generated are also nearly double of your interest payable so you still get a healthy return on your investment even after paying your interest payable/debt.
An early repayment saves much of interest payment. An interest on any kind of loan comes in a compound interest rate. It directly means the interest payment increases with every passing day and month. So when a borrower does an early repayment he can save the interest which he was to pay while servicing the whole tenure. By paying off the mortgage you have eliminated a huge burden to meet each month. If you are out of work or your income otherwise abruptly halts, you are not in danger of loosing your home to foreclosure and can arrange for a timely, controlled sale of the asset if it becomes necessary. Your house will likely not go down in value unless the town you are in encounters a natural disaster or people just do not want to live there anymore. Investments have a far greater risk of capital depreciation.