Closing of Home Loan by Paying Full Outstanding Balance - Western Australia

digitalfarmer on 16/02/2023 - 23:48

Hi Guys,

Need some advice on closing the home loan account by paying the full outstanding balance to the bank.

The process I know of is to ask the bank to take the outstanding balance of the home loan from my transaction account and transfer the title into my name. I have an offset account with the bank and this house was a "First Home Buyer" house.

Can you guys help me to answer the following questions?

1) What should I watch for when applying for closing the home loan account with the bank? Is there any catch?

2) Is there any extra charge when closing the home loan other than the outstanding balance of the home loan?

3) How does the bank send the title certificate (digital or paper)? any recommendation on safely storing the title certificate?

4) Can someone please provide me with a checklist for "Release a security property in Western Australia"?

5) Please let me know if I am missing something.

Any advice will be highly appreciated.

Thanks in advance.

Financial Home Loan

Comments

  • bargaino on 17/02/2023 - 00:21
    +1

    I assume not on a fixed rate?
    IANAL, but will answer on a the basis that somebody will speak up if I'm wrong :)

    Land titles are all digital now. You can request a paper copy if you like.
    The title is in your name, not the banks. They just need to remove the mortgage, and there will be a fee.

    Why not just contact the bank? Its not something you can negotiate a better deal for.
    One note - if you have a savings account, they might start charging a monthly fee without a mortgage.

    • digitalfarmer on 17/02/2023 - 01:20

      Its a variable rate loan. Thanks for the reply

    • spal on 17/02/2023 - 07:50
      +1

      You are correct @bargaino
      Congratulations OP on paying out your mortgage.
      The title is always in owners names, but would currently have mortgage registered on the title. When the full mortgage is paid out, bank will discharge the mortgage. That means as a owner, there aren't any more encumbrances on the property and you are free to do whatever as a property owner without needing to get the mortgagee's permission.
      Bank will charge you a fee for closing off the mortgage usually around $300-$350 to cover banks costs of processing the discharge application. They will also pass on the mortgage discharge fee charged by the Land Titles Office. In Victoria this is about $125. Look up in WA.
      If you are going to continue banking with the same bank, it is worth looking for the suitable banking products and the fees. About 15 years back banks used to charge $8 as monthly fees per account. There will be annual fees for credit cards. You might be able to negotiate some deals with the bank to get a balance between your needs and the fees you need to pay. I know that some banks like ING, CBA and HSBC have fee free banking if you deposit certain amount every month. You don't need to keep the amounts, just deposit and instant withdrawal works too.

  • ladybird21 on 17/02/2023 - 00:24

    Hi depends on if you're on a fixed or variable rate. If it's fixed, you could have a break cost and depending on the money market, the fee can change daily and even fluctuate within the day. I believe you have to go to the lands title Office which is in Midland to pay full and request for the title deeds after the loan is finalised. I'm not aware of any safety deposit boxes in local branches of banks in Perth but maybe there are in the CBD for storing your title deeds. Congratulations!

  • Jugganautx on 17/02/2023 - 06:48
    -3

    What did they say when you asked them?

  • deveshwar0 on 17/02/2023 - 07:49
    +1

    You can pay off the loan and still leave the title with the bank. They'll keep it safe for you for no charge and you can have the mortgage discharged at a later date by paying the discharge fee whenever you want to have the title.

    • Typical16-bitEnjoyer on 17/02/2023 - 08:48
      +1

      Someone hasn't heard of eCT

      • deveshwar0 on 17/02/2023 - 17:07
        +2

        Mate I do know what an eCT is and how it's used along with Control of the Right to Deal (CORD).
        I just didn't think that the OP would understand or want that kind of detail given the limited knowledge they displayed.
        Essentially, it's still safer for the bank to have the control of the title rather than having it discharged from the bank and then worry about someone fraudulently taking it over. OP, If you do decide to have the mortgage discharged, perhaps have a look at the possibilities of someone registering a caveat on it. Not a lawyer and this is not legal advice.

        • Typical16-bitEnjoyer on 17/02/2023 - 19:07

          What grounds would OP have to lodge a caveat on their own title? You can't just lodge one for no particular reason, even if you're the RP.

          • deveshwar0 on 17/02/2023 - 19:17

            @Typical16-bitEnjoyer: Agree, that's why I said 'someone'.

            • Typical16-bitEnjoyer on 18/02/2023 - 21:03

              @deveshwar0: Why would OP permit someone else, no matter how trusted, to lodge a caveat on their own property lmfao. That'll be super fun and expensive if they stop getting along, are uncontactable or one of them dies.

              There's far easier and cheaper options to protect and monitor your title.

  • Typical16-bitEnjoyer on 17/02/2023 - 08:47
    +3

    This is exactly why banks need mortgage departments and trained staff to answer these common queries.

    Oh wait

    • bargaino on 17/02/2023 - 10:40

      Maybe OP wants some basic understanding, to prepare before spending 2 hours on hold?

      • Sleeqb7 on 17/02/2023 - 12:05

        Could have posted this while on hold, too.

      • Typical16-bitEnjoyer on 17/02/2023 - 15:21

        Go ahead, have a crack at answering each of OP's vague questions without knowing the bank. grabs popcorn

        Oh wait - your answer was "Why not just contact the bank?" lmfao

  • Seraphin7 on 17/02/2023 - 08:57
    +4

    There is, of course, at least one other option. You could simply put the full amount outstanding in your offset account, leave the loan open, and therefore keep a line of credit available for whatever purpose you might have.

    Other than that, talk to your bank … they do this all day everyday and contrary to popular opinion aren't trying to "rip you off".

    On your first two questions …

    1. What catches are you looking for? The only one I would be watchful for is to ensure you get all relevant paperwork and that the associated accounts are actually closed.
    2. There may be a discharge fee. Depends what you have agreed to.
  • Mulga Bill on 17/02/2023 - 10:38

    2) The payout will likely be current balance + current months fee + interest accruing in the background since last charged + Bank discharge fee + Title Office Registration of Discharge of Mortgage fee (+ break cost if fixed rate loan). Your bank should be able to give you this total.

    3) You wont generally get a physical title back. There may be quite a delay in it getting processed too because a paid-in-full discharge has low priority with the Title Office vs property settlement so goes at the bottom of the pile

    5) Not common but some banks have old offset accounts that must close when a linked home loan is closed (this also applies to some credit cards bundles) so you may need to adjust your automatic credits and debits to go to another account.

    5) if you have had your home for a long time the certificate of title may be one of those old parchments…I believe paper certificate of titles get destroyed when the bank's mortgage is removed and converted to an electronic title…so if it is an old parchment title and you want to keep it I believe you can pay a small fee to get the old title back.

    5) Make sure you arrange the discharge with the bank. Simply paying off the loan without contacting your bank does not mean it will get closed.

  • Mulga Bill on 17/02/2023 - 10:45

    2) Some banks dont organize the discharge themselves rather have an external solicitor that arranges the discharge documents so there may be a fee for that too.

    5) Some old fashion banks generate the discharge documents and give them to you to take to the Title office to register/pay the fee. If they do this make sure you get it processed or in 10 yrs you will go to sell your home and cant find the title. I have seen this happen before, delaying settlement and costing the customer a fortune to replace the lost title.

  • mr_alligator on 17/02/2023 - 11:23
    +6

    I wish I had this problem to worry about on a Friday morning instead of 29 yrs of remaining term to look forward to.

  • JIMB0 on 17/02/2023 - 15:15

    Just pay the loan down to $20 and laugh at the 1c of interest charged each month. The bank should allow you to stop all payments once at this level. Then you have a line of credit you can use if required.

  • sam-1966 on 17/02/2023 - 19:24
    +2

    Our home loan was paid off and I asked friends about this and we decided to just leave it where it was - all stamped and ready.

    A couple of years later we wanted to buy a car and I went into the local branch and enquired about loans for that - the young guy asked about mortgages and I said we didn't have one - so he asked where it had been etc… we could get a small loan with a much lower rate because our deeds/titles etc were still with them. Worked out well for us.

    I extended it a few years later when our daughter needed spinal surgery and could do it all over the phone.

    Leave you documents with them - saves time and money later.

  • Hearthstone on 18/02/2023 - 12:38
    +1

    Once you got the mortgage discharge you can applied for a caveat to be put on the title so it harder for someone to defraud the ownership and sell it without your knowledge.

  • El-Rhi on 18/02/2023 - 14:05
    +1

    Why do you want to pay out the loan? You can just leave it with a very low balance. That way you don’t need to mess around with the title and you can refinance for cashback offers

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