With mortgage interest rates in Singapore on the rise, homeowners are starting to wonder if making full payments on their mortgage loans ahead of schedule is a smart way to save. While the basic answer is yes, the financial management style and goals of homeowners can make the answer less straightforward. At times, the amount of interest saved from repaying...
Pros and cons of paying off mortgage early
Paying off the mortgage is a dream come true for many homeowners. However, before you go ahead to settle your mortgage before the loan term is up, there are some pros and cons that you need to take into consideration.
Most banks impose an early loan redemption penalty that goes as high as 1.5 per cent of the outstanding loan sum. However, a precise calculation may reveal that it is worth paying these feesWays to pay off mortgage early If you have evaluated the pros and cons and are still keen to pay off your mortgage before the loan term is up, here are three strategies that you may consider.Paying extra money against the principal every month or making an extra principal-only payment annually can easily save you large sums in interest over the life of the loan.
Taking the earlier example as a reference, paying an extra $200 per month on a $500,000 home loan with four per cent interest significantly reduces the repayment period and cuts down the total interest of the loan by $55,914.70.
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