Mortgage release fees on purchase of IP in Brisbane

Discussion in 'Accounting & Tax' started by pthm, 14th Jul, 2006.

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  1. pthm

    pthm Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    121
    We bought an IP in Brisbane a few months ago, and the bank (CBA) debited our account for "TOF of $1,126.20" on settlement. We did not understand what this fee related to, because the transfer duty on the mortgage was less than this. So, we queried the bank, and this was their answer:

    Break up of fees as follows:
    Release of Mortgage - 2 x $108.30 = $216.60
    Transfer = $801.30
    Register of New Mortgage = $108.30

    I used one of the calculators available on the internet to calculate the fees and taxes on the value of the property of $475,000 and a loan of $380,000 (80% borrowing). These were the results:

    Mortgage registration fee $111.30
    Transfer fee $822.30
    Stamp duty on property $15,100 (we paid this)
    Stamp duty on loan $1,520 (we paid this)

    So, there are some slight differences between the bank's figures and the calculated figures ($801.30 vs $822.30, and $108.30 vs $111.30).

    However, what puzzles us is that why did we have to pay for the 2 releases of mortgages by the vendors. Is this normal? :confused: Would appreciate any clarification or views on this. We are going to ask the bank the same question if it was right that we should pay for the discharge of the vendors' mortgages.

    Thanks in advance.
     
    pthm, 14th Jul, 2006
    #1
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Hiya

    if there are 2 mortgages registered (not unusual) then both need to be discharged.

    The incoming lender wears the cost but will always pass onto you.

    Normally the vendor makes an allwance for this in the adjustments, so that they pick up the tab, even though on the surface you have paid it

    ta
    rolf
     
    Rolf Latham, 15th Jul, 2006
    #2
  3. pthm

    pthm Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
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    Hiya Rolf

    That was a great answer! You were absolutely right - I went back and checked the settlement details and yes, they did adjust for the release of the 2 registered mortgages by the vendors (the exact amount). So, in effect we did not pay for the release fee of the vendors' registered mortgages at all. Thank you so much :D :D :D - I was worrying for a moment that our bank was being silly.
     
    pthm, 15th Jul, 2006
    #3