Repay the mortgage early or keep money in the account?

The right financial choice depends on comparing rates. Repaying early tends to be advantageous if the interest rate you save on the loan is higher than the net return you can earn, after tax, by keeping or investing that money elsewhere.

For example, if your mortgage costs 4% and your savings are earning a net 2%, early repayment will usually make more sense. On the other hand, if you can achieve a return higher than the mortgage rate, keeping the money invested may be preferable.

When you repay part of the mortgage, you reduce the outstanding capital, which lowers the weight of monthly interest and, in many cases, shortens the loan term.

Even so, three points should be checked before deciding: i) Emergency fund: never use money you may need for unexpected events; ii) Early repayment costs: check whether the early repayment fee (0.5% or 2%) wipes out the benefit of the immediate savings; iii) Insurance: when the debt decreases, the insured capital on life and home insurance may also fall, generating additional monthly savings.