|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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