Should I keep my mortgage?
There are circumstances in which you could be better off choosing not to discharge your home loan. Let's say you've paid off almost your entire mortgage, but a big chunk of this is in extra repayments sitting in your offset account (or accessible via a redraw facility). This money has paid off the loan but its yours to access if needed. You might have put most of your savings there.
If you repay the loan entirely you're free of debt and you can discharge the mortgage. But all that money is gone. If you opted to keep the loan going and keep making small repayments on the remaining debt, you could keep the extra repayments accessible while you build up more savings outside the home loan. It depends on whether you need that money or not.
Is it worth using the redraw facility on a mortgage loan to pay off a personal loan and credit card
Hi Kapanaca,
It depends on your financial situation, your goals, and the way your debt is structured. Generally speaking, if you’re paying around 2% on your mortgage debt and 20% on your credit card debt, then redrawing funds from your home loan to repay your credit card could save you money.
But your home loan is structured over 30 years, so you could be paying interest on these personal debts for decades. One way to do this well is to redraw the money from your home loan to repay a personal debt, but then continue making extra payments on your home loan (equal to what you were paying on your personal debt repayment every month) so you repay the extra debt quickly.
The other key thing here is to make sure you close those personal debts and credit cards once you’ve repaid them. Otherwise, you risk adding more debt to your home loan AND creating more personal debt as well.
Hope this helps!
Cheers,
Sarah