What to do once you’ve paid off your mortgage

Here are a few steps you could take once you’re home loan free.

4 minute read

Congratulations! You’ve put in the years of hard work and paid off your mortgage. Whether you’ve been planning your next steps for years, or you’re still figuring it out, there are a few things to consider now that you’re mortgage-free.  

Jay Diesh, BNZ Home Loan Partner, shares his advice on what to do once you’ve paid off your home loan.

Celebrate your achievement

Take time to celebrate. “It’s a big life moment, so, celebrate the milestone”, says Jay. Head out for a fancy dinner, throw a party at your newly paid-off home, or take a well-earned holiday. You deserve it.

The practical steps

Stopping your automatic payments

Check whether you need to cancel your repayments. “If your mortgage is with BNZ, we’ll automatically stop your repayments once it’s all paid off”, says Jay. So that is at least one thing you can cross off your post-mortgage to-do list.

Book your Banking Review

Jay also suggests completing a Banking Review. “Once we’ve understood more about what you want to achieve, we can help point you in the right direction financially”. Having a review is an ideal way for us to make sure your banking is working based on what's important to you now and in the future, so if you’ve just paid off your mortgage and are wondering what to do next, book one in.

Consider removing the mortgage from the property title

When a home loan is repaid, the mortgage isn’t automatically removed from the title. You should talk to your lawyer about whether you should remove the mortgage or not. If you’re planning to borrow more money from your bank in the future, it might be easier to keep the mortgage on the title, so you don’t have to register a new one later on. If you want to remove the mortgage, you’ll need your lawyer to do this for you.  

Check your insurance

“Now is a great time to review how much your house is insured for”, Jay explains. “It might be years since you first insured your home. Have you renovated or built an extension since then?”

Find out how much your property’s worth

Once you’ve paid off your home loan, you might consider checking the value of your property. This could help you understand your current situation and inform any future plans you may have. For example, if you’re considering borrowing against your home to purchase a second property. Just remember, “your idea of your home’s market value could be different to the bank’s assessment”, says Jay. “So, it's worthwhile speaking to your bank first before you order an valuation”.

What next?

If you haven’t already, it’s a good idea to start thinking about what to do with your finances, now that you’re no longer paying off a mortgage.

Put it in a high-interest savings account

Rather than keeping the money in your everyday account, you could put it into an account that earns you interest - like a savings account or a term deposit. This can be a great way to save for a holiday or lock away money for later. Or if you want to save for retirement, you could put the funds towards your KiwiSaver.

Find other ways to invest

There’s no shortage of ways you can invest your new-found income. You could consider taking out a loan against your home and using it to buy an investment property, helping your children purchase their first home, investing in a managed fund, or purchasing a small business.

For the newly mortgage-free, Jay’s advice is simple. “Just take a deep breath, think about what you want to do, and get the right advice from the bank or a trusted financial advisor”, he says. “But before that? Maybe just go on a holiday. You’ve earned it”.

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This material is for general information purposes only and does not constitute, and is not intended as, personalised financial advice or as a replacement for legal advice. BNZ strongly recommends you seek advice specific to your personal financial or legal situation from a qualified adviser. Neither BNZ nor any person involved in the material accepts any liability for any direct or indirect loss or damage arising out of the use of, or reliance on, all or any part of the content.

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