Currently the interest rate on mortgage is low. So the cost of borrowed money is also low. Therefore using existing cash to pay of some of the loan may not be worth while. Moreover you may need some money if the economic get worse such as losing a job. Also if you pay off your loan partially only, you still need to service the outstanding installment. If you lose your job, you will have negative cash flow. This is made worse by having less spare cash. Therefore it is not advisable to pay off your loan partially and in this economic situation.

Maybe you can think of trying to save  hard to accumulate more cash for the future. So that when the mortgage interest rates goes up (which will be when economy gets better), you can use the saved cash to pay the ENTIRE loan. When the entire loan is paid, there will be no more installment. If you lose your job subsequently  (not likely when economy is good), you will not be under pressure to pay any loan. Of course you still must have at least six to 12 months of emergency cash at any one time.

Wilfred

(Note to reader: Q is an existing client who is well insured. There is no need to have additional spare cash for disability, hospitalization and critical illness. The emergency cash mentioned above is meant for family expenditure in the event of lost of job. )

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