Let's face it: Buying a home is a complicated process, and that goes double if it's your first property. Conveyancing, financing, the buying process – and that's just the start of the ownership. Even once you've paid off your home Loan, 25 or 30 years down the line, there are still a few things to take care of; discharging your Mortgage is one of them.
A subtle difference
First things first: What's the difference between a mortgage and a home loan? People like to use them for the same thing, that being the financial lending you use to pay for your home. However, a mortgage and a home loan are not interchangeable, contrary to popular use. They actually have distinct meanings, and finishing off with one doesn't necessarily mean you've finished with the other.
As JB explains in the above video, you can finish paying off your home loan and still have an undischarged mortgage. What's that, you might ask: A discharged mortgage is one that has been wiped from the title of the property, so the bank no longer holds it as security for the home loan. Unless you specifically request for it to be discharged, it will continue to be held on the title.
Should you always get a mortgage discharged?
You may be able to avoid the costs of having to register a new mortgage.
For most people, having an undischarged mortgage doesn't make very much difference to every day life. That's because you don't need to make repayments on your home loan, as you've already paid it off. You might get some side-eye from a buyer who sees there is still a mortgage on the property, but undischarged mortgages are hardly uncommon.
You could simply want to get a clean title to your property, and that's absolutely your prerogative. However, you may need to pay a fee to have it removed, and you might find that it is better to leave it in place – particularly if you are planning to continue borrowing against the house; perhaps using it as security for your investment home loan.
By keeping it undischarged, you may be able to avoid the costs of having to register a new mortgage – and avoiding costs is the name of the game if you want to make the most of your home loan financing.
Either choice could be a good one, but it's best to be aware of such features, even if you eventually do nothing about them. For more tips and tricks about your home loan or mortgage, make sure you get in touch with the expert team right here at Squirrel.
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This post first appeared on Squirrel: Mortgage Brokers Auckland, please read the originial post: here
