What happens after paying off your mortgage?

You will most likely have to discharge your mortgage once you've paid off your home loan in full. The procedure of formally removing your lender from your Certificate of Title is known as a discharge.

Notifying your lender is usually the first step in discharging your mortgage. They'll give you a Discharge Authority Form. Complete and return this form, then register your Discharge of Mortgage with your state or territory's Land Titles office. You may have to pay a discharge fee to the lender to complete the process and finally close your home loan.

You'll have money to use for other things now that you don't have a regular home loan payment hanging over your head. You may go on a holiday, buy something you've always wanted, or renovate your home. You might also put your money into other investments to try to increase your wealth. Here are some of the asset types you could consider thinking about.

• Shares
• A new property 
• Your business
• Term deposits
• Managed funds
• Personal contributions to your superannuation fund
• Cryptocurrency
• Crypto assets like NFT or cryptoart

It’s worth noting that no investment is completely risk-free. It’s important to analyse what you expect from your investment, such as the time period you wish to stay invested and the returns you expect. 

Generally, the higher the risk you’re willing to take the higher is the probability of better returns. But the probability of better returns is not a guarantee that your investment will perform. As most investments are market-linked, you cannot predict their future performance and there’s always the likelihood of losing your money. 

You could speak to a financial adviser about investing your money in a diversified portfolio of assets with varying risk profiles to reduce your investment risk. You could also park some of your money in a savings account where you could access it easily.

Your goals should ideally determine which investment plan is best for you. Do you want to significantly increase your money over the next five to 10 years? Do you wish to begin saving for your retirement consistently and securely? Do you want to be able to provide financial security for your family long after you've passed away? 

What level of risk are you willing to take? Are you ready to take out a loan to fund the investment, or would you prefer to pay for it yourself? Answering these questions will help you in determining the best investment option for you.

Investing in shares, for example, could be one of the options if you're willing to accept a certain level of risk in exchange for significant potential returns. Look at the steps you may take to raise your superannuation balance if you want to ensure a secure retirement.

Your age also plays a role in helping you decide on the right investment option. If you’re nearing retirement, you may want to consider safer alternatives than putting your money in a risky asset class, such as cryptocurrency. However, if you’re young, you may want to invest in a few volatile assets that offer high returns but are also more prone to market risk. At any age, it’s important to understand the risks associated with any type of investment before putting your hard-earned money at stake.

Another important consideration that could influence your investment decision is your budget, as you should select an investment plan that you can afford. Investing in real estate, for example, takes a significant expenditure of capital, whereas making regular payments to a high-interest savings account is considerably more accessible.

When it comes to investing, there are a few pitfalls you should consider avoiding.

1. Adding to your debt

If you've recently paid off your mortgage, consider if you truly want to take on more loans. You might be better off avoiding borrowing extra money because the financial and emotional stress of keeping up with repayments might wear you down.

2. Getting into financial trouble

You might not want to take on too much financial risk depending on your circumstances. You'll be considerably closer to retirement than you were when you initially took out a mortgage, so think about the financial ramifications if your current investment plans fail.

3. Putting the house at risk

You've worked hard for years to pay off your mortgage and make your home your own, so any investment possibilities that could risk your property should be carefully considered.

4. Expecting overnight wealth

Whatever option you choose, keep in mind that there are no guaranteed routes to fast money. If an investment appears to be too good to be true, it almost certainly never is.

Life after paying off the mortgage can be more relaxed and less stressful. Some planning, investing, and saving could help you build up your wealth securely.