I am surprised the OP has not mentioned how cash flow positive the property is to offset the payments. As if it isn't generating at least 5-10% I would have to wonder why they bought a property in the first place. As opposed to simply buying dividend paying equities or preferred shares that get tax preferential treatement.
Having said that, I agree with andrew, why earn 1% and pay 3%. Personally, assuming it is cash flow positive. I would probably continue to pay the 3%, and take the tax deduction, but invest the other money to make more than the 1%. Much more.