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427 posts

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#233345 12-Apr-2018 09:14
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I have a time deposit maturing soon which would allow me to pay the remaining balance on my mortgage in full. However I have no clue as to what is the process and if there is any cost involved. I have already emailed my bank but decided to ask here to get some ideas. I checked online and some says it needs to go through my solicitor which I am not sure is really needed as am sure that will incur a cost? I mean I am on the impression that once I transfer the full amount then I would just get the deed/title to my property with a note that there is no mortgage against it.

 

 


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  #1994640 12-Apr-2018 09:21
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Are you fixed or floating?


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  #1994641 12-Apr-2018 09:23
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As typically is the case, the answer is "it depends"

 

If you are on a floating interest rate, by all means pay it off.

 

If you are on a fixed rate for XXX years, then paying it off early will probably incur a break fee from the bank.  If that is the case, it might be worth letting the fixed term "expire" and then paying it off.

 

 


 
 
 
 




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  #1994643 12-Apr-2018 09:23
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Currently on fixed which would finish a week before my term deposit mature hence I am thinking of not re-fixing and just pay it off completely.


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  #1994646 12-Apr-2018 09:26
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If it's fixed, and the interest rates have dropped since you fixed, then the bank will calculate a break fee to cover their losses in re-lending the money at a lower rate.

 

Other than that there's a smallish legal fee to remove the security over your house and the bank might charge you and admin fee but they'll waive that if you threaten to move your business elsewhere.

 

I'm pretty sure last time we did this it only cost a few hundred bucks - a huge saving over the interest bill.


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  #1994647 12-Apr-2018 09:27
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I just email them. They tell me the total cost Inc fees. I say yes take the money. It's done within a few minutes. Celebrate.




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  #1994649 12-Apr-2018 09:28
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Once it is paid off you can either leave the title with the bank, which means you can continue to lend against it if you were to buy say a rental property.

 

Or you can have the mortgage discharged, this probably needs to go through a lawyer.

 

 

 

 


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  #1994650 12-Apr-2018 09:30
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CrashAndBurn:

 

Currently on fixed which would finish a week before my term deposit mature hence I am thinking of not re-fixing and just pay it off completely.

 

 

Well that's good, no chance of a break fee. Your fixed mortgage should just convert to a floating rate if you don't re-fix it. So you can pay off the balance for no fee whatsoever and your debt is gone  - just like paying off an overdraft. What will remain is that the bank still holds a security over your house, even though you don't owe them anything. Pay a small legal fee to get that removed.

 

Alternatively you can just leave the bank holding the security. Other than needing to be removed when you sell the house it's doing no harm and means that if you need to borrow a lot of money in a hurry, then it will be a bit  easier.

 

 


 
 
 
 




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  #1994652 12-Apr-2018 09:31
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I am just waiting for a reply from my bank. But from the initial comments from you guys, it seems there is no need for me to get it done thru a solicitor? Keep your comments coming and any other gotcha's that I may need to look out for. Does NZ have digital titles as I have a property overseas which still uses a paper certificate hence I need to keep safe all the time.


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  #1994653 12-Apr-2018 09:31
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A link effectively saying that:  https://www.raineycollins.co.nz/your-resources/articles/paying-off-your-mortgage-is-different-to-having-it-discharged-from-the-title-to-your-property.html

 

So yeah, you need a lawyer involved to get the mortgage discharged.  But you only really need to do that if you're going to be selling.

 

 

 

 


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  #1994663 12-Apr-2018 09:39
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When we did this we shifted the mortgage onto a Revolving Credit account with a modest limit as our bank does these for $0 per month. Same interest rate as floating. This way you're free to borrow against the mortgage when you need it without getting the bank or lawyers involved. Useful if something unexpected happens or you make a large purchase (eg. new car).


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  #1994688 12-Apr-2018 10:23
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We discharged part of ours when we subdivided. Cost $100 in fees.





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  #1994697 12-Apr-2018 10:53
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Wow didn't realise my house is still tied to the bank LOL. Which i gather is a good thing in case we want to borrow against it. I've always wondered what would happen. This helps!




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  #1994698 12-Apr-2018 11:07
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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.





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  #1994712 12-Apr-2018 11:28
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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.

 

We discharged our mortgage after the Chch quakes - anticipating that the extra step in having EQC remit the "over cap" payment to the bank would be a potential obstacle to progress.  This backfired seriously, EQC were using old records showing that a mortgage was registered, they sent the $115,000 cheque via snail mail to our bank who didn't know what to do what to do with it and lacked the gumption to call us, they sent it back to EQC who left it sitting on a desk somewhere for a couple a months, not just lacking the gumption to call us, but denying any knowledge that the cheque even existed.

 

Sorry - that was a bit off-topic, but IIRC, cost to discharge the mortgage was something like $100 legal fees, $80 bank processing fee that was hidden in the original documents, and another govt fee ($30 or so?) for changing the register.


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  #1994730 12-Apr-2018 11:38
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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.





Mike

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