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Would it be worth paying my mortgage off quicker now that the interest rate is so low?

April 26, 2017Business Estate Finance Interest rate mortgage paying renting worth

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Would it be worth paying my mortgage off quicker now that the interest rate is so low?

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It depends on your situation. If you have the suggested 6 months worth of living expenses already in a savings account, then the answer is probably yes. Compare the interest rate you are paying on teh mortgage with the interest rate you could get in a savings account or a 24 month CD. If the mortgage carries a higher interest rate, then it would be more economically sound to pay off the mortgage. However, you should also factor in the tax deduction – for example, if you are paying 5% on your mortgage and you are in the 25% tax bracket, then the real interest rate is closer to 3.75%, since you get back 25% of your interest. You also have to factor in whether or not you would be paying taxes on the interest earned on your savings investment, which lowers your return. Again, assuming you have the 6 months of expenses saved, in almost all cases, it is advantageous paying off the mortgage.