Is It Smart to Pay off The Clients House Early?

When mortgage brokers are assisting their clients with purchasing a home, they should be knowledgeable in all aspects of mortgages and home loans to successfully assist their clients with any questions or concerns they may have. A client inquiring about if it is smart to pay off their house early should be told that paying their house off early is a great way to save both time and money while freeing up cash flow. However, there are some disadvantages to paying off a home early, including the following examples:

• Clients will lose mortgage interest deductions resulting in an increased amount of taxable income
• Clients may run their emergency savings dry, which can result in severe financial hardships 
• Clients will potentially be required to pay a prepayment penalty, which is a fee charged by mortgage brokers for paying off a mortgage too soon
• Clients can potentially damage their credit score by paying off their home early due to the credit loss

Clients who are debating paying off their home early may benefit more from investing their funds instead of allocating them to mortgage repayments. However, paying off a mortgage early can lead a client to a wide variety of benefits, including the following examples:

• Freeing up monthly cash flow
• The potential to save money on interest
• Eliminating scheduled mortgage repayments
• Clients can own their homes sooner
• Reduction of retirement costs
• Eliminating personal debt
• Reduction of the total mortgage cost