Pros And Cons Of Making Home Loan Prepayments

Making prepayments on a home loan (sometimes called
a "mortgage") can be a powerful way, under the right
circumstances, to save. But there are drawbacks.


* Gives you free-and-clear ownership of your home sooner.

* Saves thousands of dollars of interest expense.

* Increases equity in your property.


* Prepayments reduce your liquidity.

* You may earn more by investing than by prepaying.

* Other borrowing is probably costing you more.

Source: "Bottom Line Year Book 2001" (adapted)

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