A Few Reasons to NOT Pay Off Your Mortgage Early

It’s easy to find articles and advice on the benefits of paying off your mortgage early. Sure, the thought of living without a mortgage is appealing to many people because owning your home outright is definitely a positive thing.

But, before deciding that paying off your mortgage early is the best possible choice, it’s important to look at both sides of the equation. There are actually some compelling reasons to NOT pay off your mortgage early. Ultimately, the decision on whether or not to pay your mortgage off early is entirely up to you. But it’s important to realize the pros and cons of paying off your mortgage early before you make the decision to move forward with either option.

Following are a few facts that might make you think twice about paying off your mortgage early:

Your money will not be liquid if you use it to pay off your mortgage. This may or may not be a relevant factor to you (depending on your specific financial situation). But if you have just enough cash on hand to pay off your mortgage, but you don’t have additional funds available, you won’t have easy access to liquid money if you need it in a pinch. Of course, if you own your home outright, you can always apply for a mortgage in order to generate cash. But the process can take several weeks.

You will lose the ability to deduct your mortgage interest payments on your tax return. Many homeowners with a mortgage qualify to deduct their mortgage interest on their federal tax return. For many people, this can result in a significant tax savings. If you don’t have a mortgage, you won’t have mortgage interest to deduct.

Your mortgage interest rate might be significanly lower than the predicted increase in value of your investments. For example, if you have $100,000 invested and you believe the money will increase in value 10 percent each year that you keep it invested, does it make sense to pull that money out of the investment to pay off a mortgage that is charging you only 4 percent interest?


Keeping your emergency fund well-funded is important. If paying off your mortgage requires you to liquidate your emergency fund, you might find yourself in financial trouble if you incur a sudden expense (such as a medical bill) that you can’t pay in full. Therefore, think carefully before spending your emergency fund on anything other than a true emergency.


Owning your home outright might be a goal that you want to achieve as quickly as possible. If the thought of being mortgage-free is one of your driving forces, you should pursue reaching this goal any way you can. However, it’s always a good idea to be informed about the positives and negatives associated with paying off your mortgage early, so that you can make a well-educated decision.

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