Thursday, 13 March 2014

Why It Is Not Good To Pay Off The Mortgages Faster? - PART II

In the first part of this blog issue you have find some healthy tips on mortgage. It laid down the former reason why you should not pay off the mortgage faster. As payment of the mortgage for a longer time will let you enjoy lower interest rates, get enclosure against inflation, have some optimistic tax saving option and finally keep the emergency fund untouched.

After summing up the first part of this discussion let us jump into the next section where we have several other reasons to tell why paying off mortgage slowly is a benefit to the users.

·       You have a credit card debt or an auto loan to pay

You have to pay down the consumer loan first. The credit card rates are higher than the mortgage rates and the mortgage interest might offer you a tax deduction that you are unable to get a credit card or auto loan. You should start working on the consumer debt to zero before considering the pay down of mortgage.

·      Getting hold of the arbitrage

Recently online banks where paying 3.5% of interest rates. That is what you can get from a 30-year old fixed mortgage for these days. Economies are cyclical in nature and the deposit rates might return and can go even higher. You will glad to gain interest on the savings on your bank, rather bank charging you for your mortgages.

·      Failure to maintain the cash flow

Overpaying the mortgage almost seems like the stretching of finances close to the limits. If you are struck with hard times, you may not be able to make timely payments and this could put your home at risk. If you invest instead if overpaying the mortgages then you will get a great liquidity during your hard financial times. Banks are never impressed by over-payments. As the home is yours so until you pay off every penny whether sooner or later is of little concern to them.

·      You fail to save enough for your retirement

Many people make little contributions towards retirement savings. Putting the extra money towards the retirement savings is a smart move. As soon as you near your retirement max out your contributions, you can get the advantage of compounding your money. You have a fair chance to gain some extra bonus if you add up for retirement savings.

Will fail to maintain a higher credit score

If you make over-payment of your mortgages, them you are surely going to suffer from a poor credit score. Keep the largest debt account in a good position  to keep your credit limit at bay and help your credit score to soar high and thus you can continuing with your borrows.

Keeping a mortgage is not for everyone, if you have a habit to avoid debts then it is better to pay off the mortgage. If you have financial aspects in their due place, if the emergency fund is stocked well and you have a good saving for your retirement, then carrying any other debts may haunt you at night. Go ahead and clear off your mortgage payments.

If you want to take the advantage of the low interest rates then you can bypass those extra mortgage payments. However, the money you thought to invest in mortgage are valuable, so out them in better investment schemes do not concentrate on lifestyle spending with that extra money. Being purposeful with your money in the key to unlock success!!

Author's Bio: Moumita Dasgupta, a financial blogger and the owner of bizandfiz, shares her knowledge and expertise of various financial topics. A clear view on market, business, Forex, funds, personal finances etc. are the subjects she perfectly underlines through her articles.  Find Moumita on Google+

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