Paying £1 per month, but would like to clear.

Prudent

I took a flexible mortgage with the Northern Rock 24 months ago. The mortgage allows me to pay off as much as I want, but not redeem in full without penalties for the first five years.The term was 15 years but it was my intention to pay off some of it in lumps sums as and when I could afford. Due to unexpected circumstances I found myself with enough money to pay off the mortgage by the end  of 18 months. However there are two sets of redemption penalities (one for a help with cost options) that would cost me £1,200 if I paid off the mortgage within the first five years. So I reduced the balance to a little over £100 and now pay £1 per month

I wondered if it is possible to negotiate with the lender to pay off the mortgage in total. It must surely cost them more in admin with statements etc than they make in interest. Has anyone else been in the same position?

Fairdo_2

You have made fantastic use of the system and are now likely to be costing the lender money now. You are correct on that point. However, I don't believe that they would set a precedent, by allowing you to pay the mortgage off at this stage, even though it is costing them money.

Basically you are a break from the norm. A lot of lenders will offer this sort of facility on the premise that they expect very few people to make good use of the facility. Therefore, it ends up looking like a good selling point!

I do not see the point in you taking any different course of action, as you are getting your title deeds looked after very cheaply and the penalty that you would be pay is far too much for the freedom of not owning your property outright for the next few years.

Enjoy the fact that you are so close to clearing the mortgage and treat yourself with the spare money! (For a while anyway, then obviously look at what you can do to build up for your future well being - for the Financial Planners out there!)

If they do agree to negotiate, let us know, as that would be a fantastin precedent.

Prudent

Yes I haven't actually considered this until now,because I knew it offered a good deal on the storage of deeds. I just liked the idea of being mortgage free. I wouldn't pay the redemption penalties to achieve this though.

I will write and see what they say. They can only say no and it doesn't matter at £1 per month anyway

Prudent

They sent me a letter last month asking if I would like a mortgage break in December to help with the cost of Christmas.

Unbelievable_2

Woohoo - you could buy windows 1 to 12 of an advent calendar with your payment holiday money ;D