You’ve finally finished paying off your home loan and are ready to celebrate this achievement. But before you start celebrating there are still a few things you need to do. You need to secure the sole ownership of your property and ensure that it’s adequately protected. Remember that the property title is held by your lender throughout your home loan, with their name listed as the owner. Once you’ve repaid the mortgage, you should get the discharge registered and update the certificate to take the lender’s name off it and put your name on it.
Can I ask my lender to revise my home’s title?
Your lender can often help you with title dealings, an overarching term for lodging or registering your mortgage discharge and updating your home’s title. Before you can make changes to the title, however, you’ll first need to confirm that you have completely repaid your home loan. Usually, you can do this by completing a discharge authority form and filling out all the details, which includes all borrowers' names and your bank details. If you have to pay any remaining fees, you may be charged a discharge fee, or receive any refunds, and the lender will debit or credit this bank account. Some lenders may ask you to submit this form via your mortgage broker if this is how you’ve taken out the loan with them.
Once all borrowers have signed and submitted the form, it can take up to 10 days to process. The next step involves your mortgage’s discharge with your state or territory’s land records authority. You may need to hire a lawyer or a conveyancer to assist with this if your lender doesn’t handle it. You can also take care of it yourself by registering the mortgage discharge online through an online conveyancer such as Property Exchange Australia (PEXA). However, some states’ land offices recommend that your lender or lawyer handle the process so make sure to check this. Although the document is stored electronically, you’ll probably receive a paper copy of the new Certificate of Title after title dealing is complete. Make sure to keep this safe in case you need it in the future.
What other actions should I take now that my home loan is closed?
Closing a home loan can mean you have extra cash in your budget due to no longer having to make repayments. Before you decide to use this money to splurge on a holiday or a new gadget, you may want to instead plan for your future. Consider increasing your super fund contributions or invest in your estate or retirement planning. For instance, you could set up a Transition to Retirement (TTR) Pension that helps you ease your way into full retirement.
Another option for the extra money is to make sure your property and belongings are sufficiently insured. You’d no doubt have purchased home insurance, or even home and contents insurance for your property already. However, your insurance coverage may have been influenced by your mortgage because the lender insisted on seeing your home insurance cover note before approving the loan. As such, you may have only purchased a basic policy. You may have also purchased mortgage protection coverage which you no longer require, so make sure you cancel it. With the mortgage now closed, you can revisit your home and contents insurance policy and upgrade the coverage as needed, especially if you have accumulated more valuable possessions.
Again, you can take these steps even while making repayments towards your mortgage if you have the finances. Suppose you have the funds to repay your home loan in full and close your home loan ahead of time. Before you do, you should consider whether you want to do this or continue making the usual repayments. If you choose the latter, your extra savings can become additional contributions to your super fund, the cash to go on a vacation or just savings. The fact that lenders currently charge historically-low interest rates can make this a sweeter proposition. To help decide which option is better, consider whether you’ll save more on the interest you’re likely to pay over the loan duration.