A home can be a forced savings tool, and making extra mortgage payments can save you thousands of dollars in interest over time, plus help you build equity in your home faster.

If you decide that it makes sense to try and pay off your mortgage early, be careful not to put your other financial goals at risk.

Will all your cash be tied up in the mortgage?

Before taking a large chunk of your income and using it to pay off your mortgage early, don’t forget to look at liquidity. Your home is considered a non-liquid asset because it can take months — or longer — to sell the property and access the capital.

One approach is to place all the extra repayments in an offset account linked to your mortgage. That way, in addition to saving you interest on your home loan, you still have some liquid cash available to you for emergency purposes.

Not having to make mortgage repayments in retirement can provide peace of mind when considering you will potentially have to live on a fixed income post retirement. As you will see below, it might not always make financial sense, but it offers peace of mind and it might allow for better budgeting in retirement.

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How will you use the money if you don’t pay off your mortgage early?

Be realistic about what you’re likely to do with that money if you don’t use it to pay off your mortgage early. If you don’t put that money toward making extra mortgage payments, will you actually use it to get ahead financially?

Below are a few things you should do before trying to pay off your home loan early by making extra repayments;

· Pay off high-interest debt before making extra mortgage payments: Other debt, like credit cards, may have much higher interest rates. Credit card debt, personal loans and even car loans usually cost you more. So, before putting money into paying off the mortgage early, get rid of these debts first.

· Make sure you’re investing for retirement: When deciding whether to pay off the mortgage or invest, don’t forget to consider retirement. Talk to your accountant and find out if you should be putting money into your tax-advantaged Superannuation account.

Having a good super balance on top of having your house paid off by the time you retire can be a good combination.

· Refinance: If you’re not on the loansHub platform, and have been with your lender for over 2 years, refinance your mortgage to another lender. You’ll get a better rate and it’s a way you can save on interest and increase your cashflow with lower repayments.

· Consider making fortnightly repayments: One way to get ahead on your mortgage without making any extra repayments is to take your monthly repayment amount, divide by 2 and set that up as your fortnightly repayments. To find out why, read our blog on simplest strategy to payoff your mortgage quicker.

· Check for extra repayment penalties: Don’t forget to check for any fees your lender may charge for exceeding mortgage repayment amount. This normally applies to fixed home loans, where lenders will restrict the amount borrowers can repay during the fixed period.

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This article does not constitute advice; readers should seek independent and personalised counsel from a trusted adviser that specialises in property, a tax accountant and property design specialist.