Mortgage all paid, but not over

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Forums › Finance and wealth management › Mortgage all paid, but not over

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#3217150 11-Apr-2024 17:25

Just a bit of clarification. You’ve paid off your home loan.
A mortgage is the banks security (or interest) in your asset, which in this case is a home/property.

When you pay off the loan the mortgage remains in place, and has zero impact in theory. The benefit can be for the home owner as if you want to take a loan out in the future it allows you to use the existing mortgage as security for that loan.

If you want to remove the mortgage completely, a solicitor needs to do this and it’s called discharging the mortgage. https://www.cab.org.nz/article/KB00042988

Congratulations on paying it off though, definitely something worth celebrating!

kingdragonfly

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#3217191 11-Apr-2024 21:12

Here's a Reddit thread about it.

Reddit,Legal Advice NZ: Mortgage paid off but security remains with bank?

It had this warning

"Any downsides?

Not massively, if you want to sell the house or get a mortgage with another bank you'll need to get it discharged (but you would anyway).

The only significant downside is that the mortgage secures any lending you owe to the bank, even if you didn't know about it.

I was a lawyer and did some work for a guy who owned a bar and the business loan was secured by a mortgage over his home.

His business partner took on considerable debt without his knowledge and the bank ended up taking his house.

But unless you have a dodgy business partner or wife/husband, probably nothing to worry about."

boosacnoodle

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#3217192 11-Apr-2024 21:19

You can use a conveyancer. This was much cheaper for me than a typical lawyer yet provide essentially the same service.

I used Property Transfer Office in Christchurch. Their fee was a mere $250 (ex. GST) + disbursements (approx. $90, inc. GST), so just a shade over $350.

kingdragonfly

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#3217195 11-Apr-2024 21:28

I've always enjoyed the chase more than the catch.

After reaching a successful conclusion after striving, I often feel depressed or empty. I've heard it called "Arrival Fallacy" or "Success Hangover".

The Arrival Fallacy

from Tal Ben-Shahar. It operates on the idea that in the process of working toward a goal, you come to expect that you will in fact reach it. That feeling of accomplishment becomes part of your day-to-day identity. You readily adjust to this new state of being so much so that actually attaining a goal turns out to be less satisfying than expected.

The Success Hangover

from Kelsey Ramsden. It's the lackluster feeling of emptiness after accomplishing a major, long-term goal. High-achievers feel most fulfilled when they’re busy and challenged. Without a clear goal to work toward, your day-to-day life is completely upended.

Both terms describe the phenomenon where individuals feel a sense of emptiness, depression, or dissatisfaction after achieving a significant goal or success. This can happen because the anticipation of success can sometimes be more satisfying than the actual achievement of the goal.

The feeling always passes after a few days.

If it gets bad, I'll use a helplines, Mental Health Foundation

Goosey

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#3217220 12-Apr-2024 07:12

cddt:

heavenlywild:

Yep this is all BAU.

I got nothing from the bank either. It just disappeared from my dashboard. No other documentation was sent.

They should at least send a cake. Or flowers.

this.

irks me that banks spend millions on advertising to tell you they support and donate and are eco friendly when really if they just offered a great deal and service….they wouldn’t need to shout from the rooftops to get you to give them your money.

then once your done with them, they don’t even say thank you…

jonathan18

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#3217250 12-Apr-2024 09:06

Congrats; we went through the same thing (paying off the mortgage) a year ago - while our bank also didn't put on a raging party for us, the extra money in our savings and the security/flexibility this has provided us (especially in an era of high inflation and shite pay rises) is much more impactful! That said, we've not bothered discharging our loan (and so technically we still have a mortgage as we have a revolving credit that's never used).

One of the reasons I've not done anything to discharge the loan is thinking the bank may start charging account fees - is that a valid concern?

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Bung

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#3217272 12-Apr-2024 10:07

You'd have to look at your bank's conditions. One NZ bank refers to fee waivers for holders of home loans with $15,000 or more outstanding.

kingdragonfly

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#3217275 12-Apr-2024 10:12

I think it's a valid point.

I don't like the idea of the bank still having its hooks into my house. Yes, bank, it's now officially my house, not yours.

If the homeowner dies, or leaves the country, it may make things easier for people getting/selling the house.

It sounds like a conveyancers are cheaper than a lawyers / solicitor.

Conveyancers specialise in property transactions only.

cddt

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#3217277 12-Apr-2024 10:17

kingdragonfly:
I don't like the idea of the bank still having its hooks into my house. Yes, bank, it's now officially my house, not yours.

If the homeowner dies, or leaves the country, it may make things easier for people getting/selling the house.

Agreed. It has to be discharged at some point - whether that's when you finish paying the mortgage or when you die and your estate has to distribute your assets. I would rather sort it out now than leave yet another thing for my wife to sort out when I'm gone.

Plus, if I get dementia when I'm 60 and decide to spend $100k on a credit card to buy worthless cryptocurrency, I don't want the bank having my house as security for that debt... not saying it is likely, just another edge case!

My referral links: BigPipe | Mercury

Bung

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#3217326 12-Apr-2024 10:26

I didn't clear my mortgages for over 20 years until the house was being sold. One was no problem as I had a letter from the lender saying that it had been repaid but the ANZ who took over PostBank had to dig the account details out of their paper cemetery. That took some time.

Behodar

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#3217332 12-Apr-2024 10:39

I paid mine off ~10 years ago and asked my broker about it at the time. She suggested keeping it active in case I ran into an emergency later and needed some money. So far I haven't needed it.

I'm with Westpac, and it still shows up in online banking. The "available" amount is slowly but surely decreasing, and I believe it matches what the balance would have been, had I made the minimum payment each time.

I'd never given a second thought to discharging it until seeing this thread...

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#3217364 12-Apr-2024 12:09

dimsim:

I wonder if you received one of these today? Surely no more topups/redraws mean that your security should be released.

i suspect why they have done that is due to the market situation, the downturn and rules for lending. so you have to go through the whole process again like your a new customer. previously they would have fast track you through as you have history with them. but now people are getting in the crap and taking out a mortgage to cover their losses. there where previously regarded as low risk but now they are in a high risk situation.

tweake

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#3217369 12-Apr-2024 12:18

kingdragonfly: I finally paid my mortgage; hopefully I'm not the last in New Zealand to claim this.

It's surprisingly anticlimactic. No communication from my bank, BNZ.

Just the account closed, and missing from the dashboard. Can't even download a final report.

congratulations.

i've recently passed that milestone as well and the bank said nothing. not even a thank you for being a good customer. i asked them to use my savings to pay the last bit. many people would not do that and the banks makes a tiny bit more.

the weird thing i found is not having that instant credit available. if a big bill came (i had hot water cylinder leak) you can pay it instantly due to the mortgage acting like an overdraft. without the mortgage i no longer have that until i can save up money again or go crawling back to the bank for a loan/overdraft.

jonathan18

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#3217442 12-Apr-2024 16:30

tweake:

i've recently passed that milestone as well and the bank said nothing. not even a thank you for being a good customer. i asked them to use my savings to pay the last bit. many people would not do that and the banks makes a tiny bit more.

the weird thing i found is not having that instant credit available. if a big bill came (i had hot water cylinder leak) you can pay it instantly due to the mortgage acting like an overdraft. without the mortgage i no longer have that until i can save up money again or go crawling back to the bank for a loan/overdraft.

This is partly why we've not bothered discharging ours - we have $30k revolving credit on tap should a major emergency arise; incredibly unlikely, but more to tide us over if we didn't have enough ready cash (ie, waiting for a term deposit to come due).

Honestly, I'm no more convinced that I should sort this out now; the risks identified seem not that likely to occur. Probably more important I sort out basics like extracting our wills from Shyster and Shyster, our (previous) lawyers...

Bung

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#3217457 12-Apr-2024 17:06

jonathan18: Probably more important I sort out basics like extracting our wills from Shyster and Shyster, our (previous) lawyers...

Usual disclaimer but if you have new wills with current lawyers doesn't that render older wills irrelevant?

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