Loan facility or title deed?

Miia has to chose between ...

QWe have an investment loan facility of a few hundred thousand dollars that holds the deed to our home as a security. The balance owing on the loan is at $1000. We would like some advice on whether to hold onto the facility as an emergency fund or to pay out the nominal $1000 that is keeping the loan active.

We have never held deeds to our property. My husband is 53 years old and I’m 49. We are both self-employed and have no dependants. We fully own our home and have no other debts.

Which is more valuable or advantageous: a ready loan facility or possession of the deed to our own home? Thank you so much.

Your question makes complete sense to me, Miia. Around your age, my wife Vicki and I finally paid off our mortgage. Back then we did not have the flexibility to keep it as a loan facility, so we put our home title deed into a secure facility and breathed a sigh of relief.

But with the world going increasingly electronic, holding your title deed is not really what it used to be. So my view is that I would keep the loan facility open. It is a super cheap way to access funds if needed, and who knows what the future will hold.

In time to come, you may find cash building up as you no longer have mortgage repayments and you may want to dip into your facility to buy some shares or an investment property. Incidentally, as I suspect you will have surplus cash flow, I’d really like you to look at topping up your super via salary sacrifice. This could be a great way to build your asset base.