Paying house off quicker!!

Hi All,

Long-time member and reader but short time poster.

I’m in need of some advice please, my first PPOR is in country WA and we decided to move from the country to Perth and make that an IP. After a few years we decided to move back to the country (our first PPOR ) and with the possibility to pay it off in 2 -3 years. Can someone assist me with the following please? I need to refinance the loan also and I want to include an offset account in the new loan.

· Is the mortgage broker’s commission still approx. .60% and if I pay the house off quicker what will happen to that commission?

· What and where can I find a claw that states the fee for paying off the house quicker?

· Is it better to pay 95% of the house off and have the remaining money in the offset account available for me if I need it?

·If the house is paid off what happens to the money in the offset account?

·Do I tell the mortgage broker or the bank depends on where I go for the refinance of my intention of paying the loan off in 2-3 years?

I do understand this post must have been posted before, I could just not find it.


Regards
Blikkies

 

The upfront portion normally stays (unless ya pay it off in a year or 2). The trail portion stops.

This should be outlined in the Credit Proposal documents you got at the start of the loan from the broker. Different brokers put different terms here.

Depends on your future plans but this can be handy if you ever need it again, you can reuse it. Vastly simpler than having to re-apply.

Nothing , its just a savings account.

Yes, because they might be able to recommend products that suit this better, or recommend against it if they know your circumstances. It'd also be a dog move to not disclose it and then broker puts in a few hours of work for free.

 

Here is my understanding:

• Mortgage broker commissions vary from lender to lender. They will receive an upfront amount for getting you onto a loan and then some trailing commission each month. Trailing commissions stop when you end the loan with that lender (pay it off or refinance). Won't affect you at all.
• Fees for paying off a loan quicker will vary from lender to lender. For most variables you can pay it off as fast as you like with no fees. It's really only fixed loans where it can be a problem to make additional repayments. Clarify this with lender before signing.
• It is probably a good idea to keep the loan account open with a low amount remaining on it rather than pay it off in case you want to access the money for any reason.
• If your house is fully paid off and the title is transferred to you, then the offset will probably revert to being just a regular bank account.
• Always be upfront with you broker/lender regarding your plans. That way they can help you get the best deal to suit your needs.

 

Thanks D.T and I agree its better to let them know about my plans , for future use of the broker also don't want to burn my bridges with him/her.

 

Thanks for the info

 

DT and Btaylor have gone through the key points - just let your broker know upfront and they will be able to plan with you the best strategy. In some cases this might mean rapidly changing the strategy in a way you might not have been aware of.

I recently set up a structure for a client who was similarly looking at paying out and closing their loan after 2 years, but also then wanted to build their portfolio with the the available equity thereafter. Instead of her initial plan, we instead proposed a structure which allowed her to continually split her loan without application so she could keep releasing deposits whilst her PPOR loan dwindled, so when she hits 2 years she'll have zero PPOR debt and able to buy several properties with the equity funds which have been re-designated for the new investment deposit use.

Horses for courses - get a great broker if you haven't already and let them know every little thing - so they can tailor the best structure for you.

 

Rolf set me up with something like this, it was unbelievably helpful in getting just the right loan splits instantly organised when I needed them. If I didn't know better I probably would have just shopped for the lowest rate and ended up being far worse off (and/or buried under a mountain of avoidable paperwork!)

 

@Corey Batt , @chylld : can you provide any more information - which bank, what to setup/tell them, etc. I'm planning on some shares debt recycling on dividends. Since the dividends each year won't be (yet) huge, I'd need something like this available.

 

Why don't you engage Corey or Rolf to help you rather than DIY

 

Strategy: Using AMP’s Master Facility to Debt Recycle https://www.propertychat.com.au/com...ng-amps-master-facility-to-debt-recycle.16449

 

Just waiting on my mechanic to tell me how to fix my car, will let you know once done.

 

Classic.

 

Not really.....mechanic would probably tell you.....have at it......make more money once you really stuff it up ☺

 

Which product is this btw?

 

lol