Invest in a Property or Pay Off Your Home Loan?


We all love the idea of being debt free. Not having to pay for a mortgage will give us financial freedom won’t it? Instead of paying off the home-loan, that money can now be used for holidays, a new car or finally buying new carpet, right?

Yes – to a degree. However, working out what your financial goals are could mean it might be worth investigating investing in property. While you could be taxed on income from an investment property, an additional source of income could mean you actually pay off your home loan much quicker than you think. And that additional source of income can be used later in life to give your pension a boost.

Here are some pros and cons for both scenarios:

Paying Off Your Home Loan First


  • You won’t have to worry about interest rate fluctuations.
  • Money used for paying off your mortgage can now be spend on other things.
  • Capital growth on your home is likely.


  • All your money is tied up in one asset – you still need somewhere to live even if you sell your home at a profit.
  • You have no additional long-term income stream.
  • You have no extra opportunities to increase wealth through property ownership as your current property is just keeping up with inflation.
  • Investment property is long-term growth. If you invest after you’ve paid off your mortgage, there’s a chance your investments won’t grow and provide as much income if they had been bought a few years earlier.
  • Your home doesn’t have tax deductible benefits.
  • You may be penalised with additional costs for paying off your home loan early.

Investing in Property Before Paying Off Your Home Loan


  • An opportunity to create an additional source of income.
  • The opportunity to build wealth much quicker.
  • Receive tax deductible benefits.
  • Increased diversification of assets – your money isn’t tied up in just one area.
  • Additional income can be factored into your retirement plans.
  • It has many advantages over other investment strategies. Isn’t it interesting that the vast majority of property investors are working class families. Why? It is easy to do and not complicated like so many forms of investing


  • If your investment property is untenanted you’ll still have to keep paying the loan even if there is no income.
  • Maintenance costs, but these are generally tax deductible.
  • It’s an added stress – but using a property management agency will reduce any stress associated with managing the property.

Ultimately, any investment has a risk associated with it. If you’re thinking of investing in property, like any other investment, it comes down to doing your homework, talking to financial specialists, making educated decisions and knowing the financial risks involved.

If you would like to know more about property investment or the benefits of our property management services, our knowledgeable and experienced team would love to help. With over 40 years of business in the area, we are one of Newcastle’s longest established real estate offices, so give us a call on 02 4954 8833 or pop into our Cardiff office for a chat.