Mercy for the Believers:
Allah Said: “There has certainly come to you a Messenger from among yourselves. Grievous to him is what you suffer; (he is) concerned over you (i.e., your guidance) and to the believers is kind and merciful.” (Quran: 9:128)

Allah Said: ”It was by the mercy of Allah that you were lenient with them ”(Quran, 3:159)

Prophet Muhammad (pbuh) said: "Surely he is not a Muslim who does not take interest in the affairs of Muslims. And surely he is not a Muslim who hears a Muslim calling for help and does not respond to his call."

Anas ibn Malik (may Allah be pleased with both them) said: While we were in the mosque with Allah's Messenger (pbuh) a desert Arab came and began to pass water in the mosque. The companions of Allah's Messenger said, "Stop! Stop!" but Allah's Messenger (may Allah's blessings and peace be upon him) said, "Don't interrupt him; leave him alone." They left him alone, and when he had finished, Allah's Messenger (may Allah's blessings and peace be upon him) called him and said to him, "These mosques are not suitable places for urine and filth, but are only for remembrance of Allah, prayer and recitation of the Qur'an," or however Allah's Messenger expressed it.* Hadrat Ibne Malik (may Allah be pleased with him) said that he then gave orders to one of the people who brought a bucket and poured water over it. (Bukhari and Muslim)
*Indicating that the transmitter is not sure of the exact words.

Abu Qatadah Haris Ibn Rib'i (may Allah be pleased with him) relates that the Holy Prophet (may Allah's blessings and peace be upon him) said: I stand up for Prayer (Salat) intending to prolong it. In the meantime I hear the wailing of a baby and I have to shorten my prayer, being apprehensive lest my recitation of a long verse may tell upon the baby's mother. (Bukhari)

Abu Huraira (may Allah be pleased with him) said that a man who had died in debt would be brought to Allah's Messenger (may Allah's blessings and peace be upon him) and he would ask whether he had left anything to discharge his debt. If he was told that he had left enough he would pray, otherwise he would tell the Muslims to pray over their friend. But when Allah (The Glorified and the Exalted) wrought the conquests at his hands he stood up and said, "I am closer to the believers than their own selves,(Qur'an, 33:6) so if any of the believers dies leaving a debt I shall be responsible for paying it, and if anyone leaves property it goes to his heirs." (Bukhari and Muslim)

Anas ibn Malik said:"I served the Prophet (pbuh) at Madinah for ten years. I was a boy. Every work that I did was not according to the desire of my master, but he never said to me: Fie!, nor did he say to me: Why did you do this? or Why did you not do this?" (Narrated by Abu-Dawood)

Mercy Towards his Enemies:
The prisoners of war taken captive at the battle of Badr were amongst his bitterest enemies. Nevertheless, he sallallaahu `alayhi wa sallam ( may Allaah exalt his mention ) made sure that they were given the best of treatment. Among them was Suhayl bin 'Amr who was a fiery speaker and was denouncing the Prophet sallallaahu `alayhi wa sallam ( may Allaah exalt his mention ). 'Umar may Allaah be pleased with him one the Prophet’s closest companions, suggested that two of his lower teeth be pulled out so that he might not be so vile in his speeches. The Prophet sallallaahu `alayhi wa sallam ( may Allaah exalt his mention ) replied: “Were I to do this, Allaah would disfigure me on the Day of Judgement, despite the fact that I am His messenger.”

In Makkah, his people inflicted him with every kind of suffering, eventually forcing him to emigrate to Madeenah, and then waged war on him for five years. However, when he conquered Makkah without bloodshed in the twenty-first year of his Prophethood, he asked the Makkan unbelievers who were awaiting his decision about them: “How do you expect me to treat you?” They responded unanimously: "You are a noble one, the son of a noble one." He announced to them his decision:
“You may go free! No reproach this day shall be on you; may God forgive you.”

Abu Huraira 'radi-Allahu anh' said, "During a holy war, we asked him to pray so that the disbelievers would be annihilated. He said, 'I was not sent to curse people so that they will be tormented. I was sent to do favors for everybody so that people will attain ease." Allahu ta'ala declares in the hundred and seventh ayat of the Surat-ul-Anbiya, "We sent thee as a mercy, as a blessing for beings."

For more benefits:
IslamWeb: The prophet Muhammad: A Mercy for All Creation
Prophet Muhammad: A Mercy for All Creation