We often find articles which appear in the general press and specialized in particular in the column(section) Finance title Pay off quickly its mortgage loan it is a good advice ?
Although seemingly the title finds all its sense of obvious fact, the fact remains that to look at the title with glasses of an observer of markets as financial as real estate, the nuances of explanation send back to us to other analyses and recommendations according to the profile of the holder of the mortgage and the investor.
If of a point of seen accounting(countable), to pay in an accelerated way its mortgage loan reduces the debt in a cutting and real way, from an economic point of view, the analysis is go there otherwise.
The dollar invests in the refund of the debt had an acquisition cost, it goes without saying that this cost should rationally be lower than the cost which costs to me my mortgage. The same reasoning if I had to raise financial funds or borrow on the banking or financial market, this cost should also represent a cost widely lower than the cost expressed in mortgage rate in which the person has to overturn according to the term concluded with his unselfish financial institution.
Yet, it is easy to demonstrate that he(it) exists on the market of the clearly more profitable and more reassuring ways of securities investment. A good advice should lead us towards clearly more profitable investments(placements) that the cost of the debt during its acquisition, in other words, the investments have to bring back(report) a clear yield much more upper to the interest rate of the debt to justify the leverage.
To pay the due minimum for its mortgage is justified by the service of comfort which our property gets us. To add a surplus of payment by way of accelerated(boosted) refund of its mortgage debt, it is to recognize that there are no other more profitable investments over the same period equivalent to the mortgage annuity.
Nevertheless, several holders of mortgage and investors hardened refinancing their property to the mortgage rate at present very low to reinvest them in higher investments. This kind of operation would not have been able to be born if the curve of the mortgage rates was not at the moment in a downward trend.
To put an obsessional focus on the refund(repayment) of its mortgage is as if we put all his eggs in the same basket of its real estate investment. And even there, if it is the sector of the real estate for which we have by tilting particular, an investment in a real estate fund(collection) can answer at the same time the need for profitability of its investment in the sector of real estate investment in all its diversity of investment that it is commercial, renting or industrial.
To pay off his mortgage more quickly it is better that to hoard his money but it is better to invest him in higher investments.
In conclusion, we can grow its value of its heritage more effectively than to pay off its mortgage debts, however, this postulate will find its limits if the mortgage rates would begin to follow an upward trend.
