You’ve likely been told that making a few extra mortgage payments each month is beneficial as you’ll pay your mortgage off faster and save thousands in interest.

However, instead of making extra principal payments, a savvier choice could be to put that money to use elsewhere — it all depends on your unique financial situation.

Yes, having a mortgage does mean you’re in debt, but it is often considered “good debt” because it’s backed by a tangible asset with real, growing value.

This means, if sell your house tomorrow you will immediately pay off your mortgage, however, this is not the case with other types of debt, such as credit card, student loan, or car debt.

Here are the top 5 reasons why you shouldn’t make extra mortgage payments: 

High-Interest Debt

Rather than paying down your mortgage which has an extremely low-interest rate, use the funds to pay down your high-interest rate debt.

While the amounts may be smaller, the interest rates are surely higher than your mortgage rates and due to compounding, high-interest debt just snowballs into a bigger and bigger number the longer you wait to pay it off.

Retirement Savings

If you haven’t started saving for retirement yet, or you’re not maxing out your annual retirement contributions, you may want to prioritize that over making extra mortgage payments.

Saving for retirement also includes compounding interest, however, unlike debt, savings compounding will assist in growing your money.

Your money will grow by leaps and bounds in these retirement accounts while, at the same time, your house will be appreciating in value, a financial win-win situation! 

Annual Tax Bill

If you’re not making monthly payments towards your taxes, you may want to save these funds for your annual tax bill.

Property values are increasing every year and with that comes tax increases. You want to be prepared to pay any higher tax bills each year. 

Emergency Fund

If you’re like most people, your savings fund was depleted when you purchased this home.

Rather than make an extra mortgage payment, build up that savings account again. If your furnace breaks in the middle of winter or your roof starts leaking in the fall, you’ll be extremely grateful that you have these extra funds to cover the costs.

Moving Soon

Moving is expensive, even if you’re making a large profit on the sale of your home.

You’ll need to pay, in advance, for inspections, repairs, maintenance, and much more before listing your home.

Having a nest egg of savings to cover these costs or to make your next down payment will be a lifesaver when the time comes. 

Paying your mortgage off as fast as possible is something we all strive for, although, ensuring you’ve taken care of all other financial aspects in your life first may make more financial sense in terms of interest rates, savings, emergencies, and such.