There are a variety of financial strategies out there for people paying off their mortgage. One of the age-old debates is whether one should focus on upping their mortgage repayments to get their home loan paid off quicker, or if putting that money toward building up a saving account is the better way to go. 

What you choose will depend on your situation. Here's the case for both. 

The case for increasing mortgage repayments

First of all, paying off your home loan quickly could net you greater savings down the line. The longer you take to pay down your mortgage, the more time there is for interest to accrue, putting you in more debt. This could cost you thousands, possibly even tens of thousands, by the time you're finished paying. 

Second, the more you pay off on your home loan, the more equity you have on your property. This will ultimately leave you with an asset that you can use to bolster your financial situation more than a savings account could.

Just be aware that increasing your repayments or changing their frequency could come with fees, which may alter the amount you originally thought you'd save.

The case for saving

To see if saving's the better option, you'll have to do some maths. Find the most effective savings accounts out there with the most advantageous interest rates. An account with compound interest could be especially useful. Then calculate the total your savings would come to if left to build up over a comparable amount of time to paying off your mortgage. 

Keep in mind, too, that a solid savings fund is important for other reasons. In case any emergencies happen, you want to know that your finances will be cushioned by a rainy day fund. Generally, around 3 to 6 months' pay is considered optimal for this. 

You could always combine the two. Save enough money for emergencies first, and with that in your back pocket, you can safely start sacrificing more of your pay cheque for extra repayments. 

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DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.