Paying off mortgage versus investment


8th November: Equity markets have a direct relation to the current economic scenario and the ongoing financial instability means one should prefer repaying mortgage than investment in stock market.

Paying off mortgage or investing in stock market– Living in turbulent and highly volatile financial times, one needs to ponder on the issue of choosing between repaying mortgage or making investment.

Benefits of clearing off your mortgage

• Paying off your mortgage--Borrowing for making investments is not advisable. And one reason why you should prefer paying off your mortgage is that doing so will result in huge savings. If you take time to read the conditions mentioned by mortgage companies, you will find that you will be required to pay around twice the actual buying price of your home before you own it. That’s one reason prompting you to clear off your mortgage rather than putting your money in highly risky stock markets.

• Get peace of mind—Another wonderful reason why you should pay off your mortgage is that doing so could help in owning a home of your dreams. This is especially good keeping in view the uncertain financial times where you always have the risk of losing your job. Apart from unemployment, other risks that might ruin your financial position include illness or divorce. So, overall, you reduce your financial risks by paying off your mortgage debt.

• Paying back mortgage- a good option—There is absolutely no law that gives preference to investment rather than clearing off your mortgage. Paying off your mortgage assures good financial stability in current times. Consider this, earning six percent from repaying your mortgage is preferable that earning six percent from making savings. And the reason is obvious. Six percent earnings from savings outside your pension or an ISA is going to reduce your returns while paying off a 6 percent mortgage will not be liable to tax deductions.

• Paying off mortgage–A guaranteed return—Paying off your mortgage debt means a guaranteed return since you will earn interest rate saved by you and wont be affected by variability of stock market returns. So, considering all these facts, it becomes evidently clear that its better to repay one’s mortgage that to invest in stock market.