The Best Time to Pay Off Your Mortgage: A Comprehensive Guide

When is the best time to pay off a mortgage? Surely you have heard, if you do it too early you have to pay, on the one hand, if you do it too late, you took too long…

It is normal to have more doubts than certainty on this subject, but that has been resolved today. Here you will learn what it means to repay a mortgage early, whether it is better to repay in installments or in term, and the advantages of each option so that you can choose the one suitable for you to choose.

What is paying off the mortgage early?

Paying off the mortgage early ways make additional payments to reduce your outstanding loan principal before the agreed deadlines. This action can result in significant interest savings over the life of the loan and can be done in two ways: through partial amortization (paying part of the outstanding capital) the whole (settlement of the debt completely).

What is better to evaluate a share or a term?

If you are hesitant about paying back by reducing the monthly payment or the term of the loan, you should know that the right option, dIt will completely depend on your personal financial situation.

Reducing the term can result in more interest savings in the long run, because you are reducing the time in which interest is generated.

But you should also remember, Reducing the monthly payment can reduce your financial burden each monthalthough interest accrued over a longer period may result in a higher total cost.

Which option is better if I can remove my mortgage?

If your mortgage allows you to apply tax deductions, it is important that you do your due diligence which of the options (amortization by reducing the term or installment) offering a higher net profit after taxes.

Often, the ability to continue filing taxes can make the option of reducing the monthly payment more attractive, although it is necessary to make detailed calculations to make the best decision based on your tax situation.

For example, If you signed up for your mortgage before 1 January 2013, you can benefit from a 15% discount. on the amounts paid each year for your mortgage loan (including fees, prepayments, commissions, etc.).

In this context, it may not be so beneficial to reduce the length of the loan, as the savings obtained from the reduction in interest may be less than the benefit of continuing to use tax concessions for an extended period. A detailed assessment is necessary if you want to know which alternatives will give you the greatest economic benefit.