Hi all, I have a no frills p+I ppor home loan which I cancelled the direct debit about 3 to 4 years ago as it is only 500 dollars and I get interest charged at about 1.50 a month from memory. I paid it off in roughly 1 year (hard core saving). Do ppl just keep the loan open like this or do they get the title deed?? What are the pros and cons of each. People mention they leave the loan as is for redraw purposes down the track or to be able to tap into equity and not bother with new paper work for loans etc etc. Anything else to worry about. Cheers.
I understand there is a greater danger of the title getting knocked off if you have it yourself, whereas it is safer with a bank. Not sure if that is still true these days. The Y-man
I believe the banks have safe custody boxes starting at around 55 dollars per annum allowing one visit to it per calendar month but then that is more than the interest im paying on the 500 dollars now around 570 after 3 to 4 years of interest accrued.
I believe titles can be held electronically these days, or may be held in a solicitors safe etc if the old paper title for an unencumbered property? It depends on if you're looking to do something with the equity or not I suppose. Be easier to release equity with a lender who currently has the title than apply new to bank (generally speaking). I'm going to guess you didn't have your average "Sydney size" mortgage if you paid it off in a year?
House was 350k Had cash to pay it off but wanted to build cash buffer and emergency fund in cash too instead of putting all funds in the home loan (no offset and didn't want and won't use redraw as saving up and paying it off the first time is hard enough) Saved like a trojan for many years before hand and still save 70 to 80% of my wage. Not in Sydney or Melbourne!!
Unless you are early/mid career, it may get more and more difficult to get a loan as you go along. The Y-man
There are no paper titles anymore really - all gone electronic. If there is a mortgage on title it is harder for someone to steal the property as the mortgage will need to be discharged and any loan secured by it paid out, so another hurdle for them.. Also if you have redraw available you might want to keep the loan in place.
Thanks @Terry_w, reasons for keeping the loan in place with redraw is for ease of access to funds instead of new applications for loans etc etc???? Or other considerations I may not have thought about. Cheers.
Got no advice whatsoever @pippen, but just wanted to say congrats. Paying off your PPOR by 36 is quite the achievement!
Cheers! Paid off by 32 turning 33 and my head hits the pillow every night with no stress which is good!
I paid off the mortgage for my second house in a few months, it was an upgrade and I had the cash to cover the difference so I only needed to wait until the old house sold, hence the fast repayment. CBA was going to charge a large "early payout fee" if I paid it off in the first 3 years, so I paid it down to 20 cents and the monthly interest rounded down to $0.00 so it sat there at 20 cents for years (until we bought our first rental - when we moved away from CBA as they were inflexible and giving us a terrible deal). There was no direct debit mortgage payment as I declined to set one up when we first got the loan (they were a little surprised, but did agree to it). We did make a couple of large redraws to purchase shares (which we paid off fairly quickly) during the loan period, so it was useful to keep the loan open.
Congrats @pippen that is such a great start to life I have the same question and was wondering where to ask, glad you did. Adding on to what you have asked I want to throw it to the forum if there is a large sum of money available for redraw, I am wondering is it possible for the bank to take that money, in case there is a recession, and add that back as a debt to us if the title is still in the bank's name? I paid off my PPOR loan in 12 years, and advance payment is sitting for the past 3 years, I left it there while looking for an investment property. I know I am a slow mover, still haven't bought an IP. (and I withdrew $10k recently to purchase shares) As @Terry_w has mentioned avoiding any legal implications I thought it was just safe to leave it in the bank's name but now the economic situations are uncertain. Would anyone be able to advise on this, shed some light?
Why do you think it might not be safe to have the mortgage to the bank? If you have paid off the loan you do not have any debt to them and no owe them money. They could not take possession of the security if this was the case.
Thanks @Terry_w I was running through the scenario if the banks end up being in crisis situations and were to take the money in the savings account and pre-payments etc. They had sent the letter a few times that my loan had been paid off. So I guess I should not be too concerned. Thanks for your quick reply.
