Paying off variable loan early, what penalties?

[CADAN]

Hi all

I took an NAB 250k loan out, variable and the term was 30, so quite standard. The loan was taken out mid 2006 and I only have a few k left to pay off, so could just walk in the bank and close the loan. I read my contract/agreement for the loan and it mentions nothing about an an early release fee. I can't seem to find any info on the NAB site either (is there a fee that is charged? also, whats the process in obtaining the title from the bank?)

 

[Rolf Latham]

Hiya

Possibly none, max would be around 700 plus an admin fee

ta
rolf

 

[Gee Cee]

Do you really want to pay it off?
Just to have the deeds sitting in a safe somewhere.
A few times i have paid a loan down to almost nothing.
Then when a deal comes through i just re apply to pull a heap of money out for a investment.

Saves all the stamp duty and loan fees and time etc.

I am no mortgage broker. So check you can still do this.

Gee Cee

Greg

 

[The Judge]

Yes as Gee Cee said it may be best not to pay it off. Another option which we are using at them moment is to put the same amount of money into an offsett account so you are not paying any interest, but the loan is still current.

 

[CADAN]

thanks for advice all, but this is my PPOR not an IP.

 

[RumpledElf]

Let us know what happens though - now we've actually made A Decision (whaddayaknow, we're capable of agreeing on something!) I'll be paying out *two* variable loans next year. One when the IP is sold, one to clear the PPoR, and I have absolutely no idea how the land will fit into this, I assume we get the title but the bank might want a slice too, we'll see. I vaguely recall I'm up for some delayed establishment fees though, the loans will be just over a year old. From memory there are some government mortgage discharge fees too that are under $200 each.

I don't see any point keeping the PPoR loan open just for a $8 a month fee and the ability to redraw a smallish sum of money that I could just get a personal loan for if things get *that* bad we need cash. Maybe if it was a $400k loan yes, but not such a small one.

We got variable loans specifically because selling up in a short timeframe was option #14 or so on the annoyingly long list of possible things to do with the house, and fixed loan break fees are NASTY.

 

[Rangi]

http://www.nab.com.au/wps/wcm/connect/nab/nab/home/personal_finance/15/8/#sect5_1


Here you go, breaking any loan prior 3-4 years can create a fee of over $500

Weigh up monthly costs/annual package fee vs this breakcost fee.
I believe there is a lot in leaving a loan open (balance remaining) not necessarily worrying about offsetting (save cents in interest with minor balance). This lending is the cheapest you will have going forward, no application fees for car loan, or overseas trip etc.

Just my humble opinion

 

[RumpledElf]

Oh, that reminds me ... I had the bank tell me if I paid the house down to < $2000 and just stopped paying, they are quite likely to just close the loan for you. Free money!