Wondering if i should pay off or keep the mortgage, but I don't understand significant benefits for keeping the loan when I'm able to pay it off. Please share your experiences. The loan is linked to an offset account and i'm not paying any interest but the annual fee that gives me in return a premium credit card for no fee.Thanks.
Home Mortgage-Keep or Pay off
Bab on 15/05/2018 - 18:25
Last edited 15/05/2018 - 18:31
Last edited 15/05/2018 - 18:31
Comments
If this is your forever house then pay it out. Keep the title with the bank though so they can keep it under lock and key for you
Can you explain how this works?
In NSW:
"A Certificate of Title is a valuable legal document and should be stored in a safe place with your other important documents e.g. passports, birth certificates and insurance papers.
If you have a mortgage and the Certificate of Title has issued to your lender, it is your lender that is responsible for securely storing your Certificate of Title until the mortgage or charge has been discharged."
For security reason easier just to let the bank keep storing your title
Certificates of Title are quite rare now. Most people do not have one. Having a mortgage on title (and issuing a Certificate of Title) makes it that little bit harder for someone seeking to engage in title fraud.
OP is in Sydney, but all the major banks transferred their titles to eCTs in VIC last year.
With new VOI requirements it would be hard for someone to transact your title even if they did get their hands on a paper title.
You can get an easy loan if you still have your mortgage,by redrawing. If you pay it off you'd have to apply all over again.
id pay it off. no brainer. can always get another loan against the house down the track if need be
if you have 100% offset pay it off but don't discharge. In this case you will have a cheap credit line.
But you have to pay the annual loan fee
If this is the house you intend to give your kids after you pass or retire in, pay it off but just leave things as it is. No need to close the account.
Ive got a re-draw facility. I am way ahead in repayments. If I pay off early do I still need to make repayments until the end of the term of the loan or until I discharge it?
And if the money is just sitting there after I effectively pay off the loan… it doesnt earn interest?
I think I am a bit confused.
(My homeloan does not have offset [only fee-free re-draw])
pay off early = paid off = discharged = no more repayments = house belongs to you = bank release land title = you keep the land title
you can get a 30 yrs loan term today and paid off fully/discharged the next day
If you keep it in redraw then it is as good as paying it out because your mortgage repayments are reduced. Then you can draw it out any time to invest in something else.
Ultimately it makes sense to pay out your personal residence and then for example negatively gear an investment properry because you can claim the interest payments as a tax deduction.If you are financially independent pay it off.
If you are not, use the offset to fund the collateral for another investment that returns better than your mortgage rate. Make sure you consider the tax implications and keep enough cash in the offset to cover emergencies such as health problems.
How can some answer this, not knowing your long or short term goals on ozboring.
Keep it, use the money as redraw when required.