Discharging a Home Loan

takezo on 22/06/2015 - 11:57

Anyone familiar with the options available when a home loan is payed out? (i.e. total discharge, not refinancing). Funds are currently sitting in an offfset account and are greater than the loan amount.

As far as I'm aware the following options are available:

  • Do nothing (keep the loan open as a line of credit). Would be paying $10 per month as a service fee.
  • Pay out the loan, and discharge the property title. This would incur a discharge fee ($300 upwards I believe).
  • Pay out the loan, without discharging the title. This saves the $10 per month, and the discharge fee.

There are no immediate plans to use the loan, but I'm wondering if $10 per month is worthwhile to keep the funds there if required.

Financial

Comments

  • jellykingdom on 22/06/2015 - 12:05
    +1

    I would try to call the bank's bluff. Tell them that you want the service fee removed and to keep your money available. They may even have some suggestions on what you can do with your money now just to keep your business. Surely you want to do something with your money now that you aren't paying any mortgage?

    You could also try telling them you're after a new house, and see what they offer to keep your business

    I'm in the same boat with $0 owing, but because i don't pay a service fee, i just leave the money in there, and then use my "new" money to invest in shares, and look for the next house

    • takezo on 22/06/2015 - 12:10
      +1

      Thanks for the suggestion - might try it out with them. To be honest I've spoken to them a couple of times, and they seem to be pretty vague about the details. I assume they do that because they want the account left open.

      • jellykingdom on 22/06/2015 - 15:16

        i suppose it depends on whether you see more income coming in. in which case, pay the $10/month to keep your XXX hundred thousand available for emergencies, then wait until you feel confident you have enough 'other' savings

        then do Option 3 (though i don't really know what "discharging the title" means) and you've got the cheapest option

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