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Advantages of Mortgage Loan Your mortgage may be the biggest tax break available to you. You can generally deduct any interest you pay on your mortgage loan, which is especially important during the early years of the loan, when most of your monthly payment consists of interest. If you purchase points, which is the process of paying an additional percentage of your loan up front in exchange for a lower interest rate, you can also deduct their purchase price. As you make your loan payment each month, you may feel like your money is disappearing into a bottomless pit. In reality, you're building equity, which is your ownership stake in the home. As your equity grows, you can use it as a source of funds by taking it in the form of a home equity loan or line of credit. The interest you pay on either of these may also be tax-deductible.
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