Should I discharge IP mortgage?

Hi team,

I would like your opinion on the following:

Question: What should I do with this fully offset investment loan?

Background:
Investment 1
Loan: $200k
Offset: $200k

Investment 2
Loan: $330k
Offset: $330k


Options for Investment 1:
1. Leave it fully offset and keeping paying the $400 annual fee
Pro:

• Access to money and deductibility if that money is used.

Cons:

• Paying $400 annual fee
• I don't need to access this cash as I already have access to $330k in the Investment 2 offset which I think is enough emergency cash.

2. Transfer the offset money into the loan itself to avoid the $400 annual fee
Pro:

• Avoid the $400 fee
• Avoid discharge fees
• Avoid need to store title
• Close the offset account which has stupid features like rejecting any deposits above the loan limit.

Cons:

• No deductibility if redrawing the money but I already have access to $330k in the Investment 2 offset which I think is enough emergency cash.

3. Close out the loan completely (discharge the mortgage).
Pro:

• Avoid the $400 fee.
• Close the offset account with stupid features

Cons:

• Discharge fee and have to store the title safely.

I am leaning towards Option 2. Please let me know your thoughts and what I've potentially overlooked entirely.

Have a great weekend.

 

Do you have an owner occupier or intent to purchase one in future?

 

Good question - We have one and own it outright.

 

We are about to hit 40, two rascals in school, we love our house and don't plan to move.
Only major thing about to happen, we MIGHT drop to one salary in a few months (too much stress for spouse, we want to prioritise family and relaxation). I think one salary is doable with no real rent or mortgage expense.

 

None of the above, I would at least leave loans opens. I would not worry about a paltry $400, maybe $300 after tax. If that made any cash flow problem, I would put 100k in some high dividend paying shares and earn 20 times that. Even 5k would cover the $400.

 

Do you know loans and mortgages are not the same thing.
You could keep the loans open but discharge one mortgage potentially.

Whats your future plans.
Do you qualify for further borrowings at the moment?

 

Could one keep that same amount of the loan open if its not secured by the property any more?

 

it would have to be secured by a property, this doesn't necessarily mean the current one it is secured by