SELLING AND YOUR MORTGAGE
- Written by Melanie Toye, October 11, 2013
Before you sell your property, speak with a mortgage professional to discuss where you want your new mortgage to be. When you sell your property, your mortgage is discharged or paid off. Any profit made above the mortgage owing will be paid to you directly.
This a very good time to review the mortgage market and see what offers are out there. The best way is to speak with a mortgage professional to help you compare the best deal for your circumstances. If you have found a new property and want to transfer the mortgage across, you must speak with your lender. If the next property requires a higher mortgage than your current mortgage, you will have two loans, one new and one existing.
This gives you the opportunity to have one part of the mortgage take benefit of the lower fixed rates and the other variable, if you feel this is the right option for you. By speaking with a mortgage professional, they will see very clearly your finances, give you a guide on how much the lender may roughly offer, give advice on possible borrowing options and more.
With any sale of property or purchase, the paperwork is high. Some lending institutions require a signed Discharge Authority to be submitted. Be sure to contact your lender to notify them. They will require when settlement date is scheduled and will advise you on the final pay-out figure of your mortgage, including the cost of the discharge. A Discharge of Mortgage document is given to the buyer at settlement and is then lodged at the Land Titles Office.
Another great decision by the Reserve Bank of Australia Board that all Australian home owners will be cheering about. On 2 September, the Board decided to leave the cash rate unchanged at 2.5 per cent.
This gives mortgage owners a chance to continue to add additional money into their mortgage without the funds being chewed up by high interest charges.
And because of this, mortgages will be paid out much quicker. In some cases, if a mortgage owner adds an additional $200 a week into their mortgage. They might be able to chop five years, off their total loan amount. Can you imagine not paying a mortgage repayment anymore? Well, if you pay extra in your mortgage while taking advantage of the low interest rates, you could be living without a mortgage much sooner than you except.
The things you could do with that extra money. Maybe even put it towards a holiday home, or investment property, or building your super, or just taking a wonderful holiday somewhere.
Sooner or later, interest rates will climb again. There is no doubt about that. So taking full advantage of the low interest rates now, is in your favour.
Pending on who your mortgage is with, you might be able to put the additional payments into a redraw facility, in case down the track you need to use it for an emergency.
Some mortgage owners put their additional funds into a savings account to earn interest. But say $5,000 in savings a year, you earn $100 in interest and then taxed from the interest you earned. Would it be more for your end pocket if your savings were put against your mortgage?
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