Paying mortgage in full - What is the process?

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#1994747 12-Apr-2018 11:49

Fred99:
I think others have given reason to leave the mortgage with the bank - easy/cheap access to revolving credit facility if you need it.

That may not be the case depending on how old the original loan was. I missed clearing a POSB loan before ANZ took over. Then found that ANZ had a $250 fee for early repayment and if I wanted a new loan I'd have to start from scratch.

At the moment I'm trusting that even an Australian bank wouldn't try to screw me over unless I owed them something. One thing that occurred to me is they can transfer their mortgage to someone else. Maybe there's scope there for something. In the UK it seems that the fee for mortgage repayment includes the bank discharging the mortgage.

Fred99

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#1994758 12-Apr-2018 12:06

I wouldn't trust that not owing money to a bank is any protection against them trying to screw you over.

They're extremely inflexible and policy-manual driven these days. It can be a PITA even when cashed-up (in fixed term deposits) to make major purchases without facing break fees or exorbitant interest, revolving credit against a mortgage is a great facility. For example I recently bought a car for cash - it would have been easier to tack it on to the mortgage (if I still had one with revolving credit) than faff around shifting cash between accounts. That said, many people become seriously unstuck when given access to credit - so if you're not disciplined and prone to impulse buy because you can, revolving credit might not be the best thing to have.

darylblake

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#1994762 12-Apr-2018 12:15

Call your bank and ask the question. You can always try to negotiate. Sometimes there is a fee, sometimes they wave it, it depends on whats happening next. If they think there is a chance of them getting new lending or investments they may reduce or wave any break fees. Depends on fixed or floating and if fixed the rates its fixed at. It could potentially change daily.

You need to pay to get a deed discharged from the bank its easier, and generally safer to leave it with the bank even if you paid off the mortgage because its easier to get lending again. But sometimes you need the deed.

I have broken fixed rates before at no charge, just because they ran it through the computer and it allowed me to break it for $0. So i said sweet as..

muppet

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#1994862 12-Apr-2018 13:55

It's pretty easy:

Step 1) Walk into branch of bank.

Step 2) Locate a Teller.

Step 3) Say to the Teller "Hello, I'd like to pay off my mortgage please". Note: Saying the word "Hello" is optional.

Step 4) Follow instructions of Teller.

Step 5) Depart bank.

Step 6) Die happy (this step can be delayed for a period of time if you like)

CrashAndBurn

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#1994873 12-Apr-2018 14:12

muppet:

It's pretty easy:

Step 1) Walk into branch of bank.

Step 2) Locate a Teller.

Step 3) Say to the Teller "Hello, I'd like to pay off my mortgage please". Note: Saying the word "Hello" is optional.

Step 4) Follow instructions of Teller.

Step 5) Depart bank.

Step 6) Die happy (this step can be delayed for a period of time if you like)

Talking to a teller now incurs a fee :(

But it is good to see the other points raised by GZ members e.g. pros and cons of leaving it with the bank or getting it discharged.

afe66

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#1994921 12-Apr-2018 15:26

When we paid the mortgage off we left the revolving component of the mortgage still in place although we dont use it. Bit like a 60K overdraft limit

Because it is till under a theoretical mortgage, we still get the fee free banking deal we got as part of being having a mortgage.

JayADee

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#1994954 12-Apr-2018 15:58

afe66:
When we paid the mortgage off we left the revolving component of the mortgage still in place although we dont use it. Bit like a 60K overdraft limit

Because it is till under a theoretical mortgage, we still get the fee free banking deal we got as part of being having a mortgage.

We also left it undischarged in case we wanted a future loan and ditto have a fee-free deal on one of our accounts which up till now has been handy. With the local branch closing now and retirement looming it might be a good time to sign it off...

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mudguard

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#1994988 12-Apr-2018 16:51

MikeAqua:

I wouldn't want bank having a security over my house if I didn't owe them any money. I'd get the mortgage discharged ASAP after the loan is repaid.

That's fair enough. The problem is though once it's discharged if you want to borrow again you have to go through a full application again. And if you're 60+ and nearing retirement you might get a different answer than you expect...

mattwnz

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#1994990 12-Apr-2018 16:57

CrashAndBurn:

Talking to a teller now incurs a fee :(

But it is good to see the other points raised by GZ members e.g. pros and cons of leaving it with the bank or getting it discharged.

Who's the bank? Sounds like you need to change bank if they are charging to talk to someone. I know some banks now charge you if you make more than 3 calls to their call centre a month, which I object to, so moved bank.

eracode

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#1994994 12-Apr-2018 17:04

MikeAqua:
Fred99:

MikeAqua:

I wouldn't want bank having a security over my house if I didn't owe them any money. I'd get the mortgage discharged ASAP after the loan is repaid.

I think others have given reason to leave the mortgage with the bank - easy/cheap access to revolving credit facility if you need it.

I get that. But I'd sleep better at night knowing no-one has a security registered over my property.

Besides that the security is only for one bank. If one was going to finance again, why not look at multiple banks.

You can’t really look at multiple banks because banks will only lend at home loan rates if they hold a first mortgage - and by definition only one lending bank can hold the first mortgage.

Banks will lend without a mortgage security but unsecured bank loans are astronomically priced. Loans secured by a second mortgage can be arranged but are extremely rare and are priced similar to unsecured.

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Aredwood

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#1994996 12-Apr-2018 17:06

mudguard:
That's fair enough. The problem is though once it's discharged if you want to borrow again you have to go through a full application again. And if you're 60+ and nearing retirement you might get a different answer than you expect...

The responsible lending rules that the banks are now bound to. Mean that they are unlikely to grant a large overdraft or revolving credit as a new application. Unless it is to buy a house.

So unless you have a very high income, you probably would get declined trying to apply again.

froob

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#1995022 12-Apr-2018 18:09

I would probably get the mortgage discharged once the loan was repaid. Having it there means that, technically speaking, you probably still have to get your bank involved in various transactions, such as alterations to your home. Third parties might also have an obligation to pay your bank, rather than you, such as in the example above. If it’s an all obligations mortgage, then potentially your bank could also call it in on the basis of overdrafts, credit cards, personal loans, etc.

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Batman

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#1995035 12-Apr-2018 19:18

mattwnz:

CrashAndBurn:

Talking to a teller now incurs a fee :(

But it is good to see the other points raised by GZ members e.g. pros and cons of leaving it with the bank or getting it discharged.

Who's the bank? Sounds like you need to change bank if they are charging to talk to someone. I know some banks now charge you if you make more than 3 calls to their call centre a month, which I object to, so moved bank.

Banks are one of the dumbest and most painful things in life.

I had a bank that over time I found to charge all kinds of fees.

One day I was so sick of it I arranged with another bank and transferred everything across.

I went to original bank to close everything. The banker asked why. I said fees. He said oh I can just remove all your fees if you like.

@#$%^&* !!!!!!!!

eracode

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#1995046 12-Apr-2018 19:55

If you don’t get the mortgage discharged once you have fully repaid home loans, it will still show up on any Title Search that is done at a later date - e.g. when you are selling your home. This may make it look like you still owe a bank when, in fact, you don’t. This in itself may help shape potential purchasers’ views and actions regarding purchasing your home.

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mattwnz

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#1995063 12-Apr-2018 20:33

eracode: This in itself may help shape potential purchasers’ views and actions regarding purchasing your home.

Not sure how, because it is fairly normal to have a mortgage. Older people selling should have paid their one off by retirements. Although I have seen many who haven't, because they have borrowed against their house to start or run a business etc. IMO it shouldn't make much difference to potential buyers, unless you think they could be desperate to sell due to needing the money, or can't keep up with mortgage payments etc

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