Kevin O’Leary says you should pay off your mortgage quickly. here’s how

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Getting rid of this debt could be to your advantage.

Key points

  • Paying off a mortgage early can lead to big savings and greater financial freedom.
  • With the right approach, you could be able to eliminate your housing debt sooner than expected.
  • You can try refinancing your mortgage for a shorter term and pouring all the extra money you receive into it to pay it off sooner.

Many people sign a mortgage that they won’t be able to pay off for 30 years. But if you ask shark tankLike Kevin O’Leary, it’s best to pay off your mortgage as soon as possible.

Now, for one thing, mortgage debt is generally considered the “right” kind to have. In effect, it helps you build equity in an asset that can appreciate in value over time. So you’ll often hear that there’s no need to rush to pay off your home sooner than expected.

On the other hand, mortgage debt is still debt. And O’Leary insists losing it quickly could be to your advantage in more ways than one.

First, there are interest savings. The sooner you pay off your home, the less interest you pay on your mortgage.

Then there is the freedom of having no debt over your head. As O’Leary told CNBC, “You want to get rid of [your mortgage] so you can start saving money and investing in your future.”

Plus, you never know what curve balls life might throw at you. “Life is unpredictable,” O’Leary said. “What happens if you get laid off or incur unexpected expenses elsewhere? Your once-manageable mortgage is suddenly going to seem less manageable.

Clearly, O’Leary makes a compelling case for getting out of mortgage debt. And if you’re itching to go that route, here are some strategies to employ.

1. Refinance a 30-year loan into a 15-year loan

If you have a 30-year mortgage, you can always make additional payments as the money comes in. But it’s not always easy to discipline yourself to do so. On the other hand, if you lock yourself into a 15-year loan, you will effectively be forced to make those higher payments whether you feel like it or not. Also, with a 15-year mortgage, you’re likely to get a lower interest rate than a 30-year loan, so there’s that benefit as well.

Now there is a caveat. You should only commit to a 30-year mortgage if you can really afford the higher monthly payments. But if they fit your budget, it may be worth doing.

2. Inject the deals into your mortgage

You can earn extra money from time to time, whether it’s a tax refund or a bonus from your employer. Putting that money into your mortgage could lower it sooner without you having to sacrifice other luxuries in the process.

3. Go easy on renovations until your home is paid for

You might want to update your kitchen with nicer countertops or treat yourself to new floors in your upstairs hallway. But if there are no technical issues with your home, you might want to wait for the renovations and pay off your mortgage first. The money you would otherwise spend on upgrades could instead contribute to reducing your loan principal.

Should you pay off your mortgage quickly?

In some cases, it may make more sense to keep a mortgage for its full term than to pay it off early, for example if you have other goals you are trying to achieve and you have a low interest rate on your home loan. But if you’re interested in following O’Leary’s advice, these tips could help you eliminate that debt faster — and reap the benefit of not having a monthly housing payment hanging over your head. your head.

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