Pay off mortgage in full?

bcfcjwb1

Hi,

We're in the lucky position of being able to clear the whole of our £125k mortgage. The 3 year fixed rate of 4.59% is due to come to an end on 31/10/2008.

I was planning to pay off £124k of the balance as I've heard in the past that it is always a good idea to leave ~£1k of the mortgage outstanding.

Can anyone advise if this is true and if so, why it this the case?

Thanks in advance

wymondham

Wait until your fixed rate ends, then pay it off or you might get extra charges. I don't think keeping anything outstanding these days has any benefit, but I stand to be corrected!

bcfcjwb1

I'm planning to CHAPS the payment in the 1st week of November - as soon as I can get all the money in one place (I've been keeping less than £35k in various places!)

dimbo61

:j well done on becoming MF
At the end of a very good fixed rate as well.
Next save for the future and build up your cash ISA,s
The only reason I might not clear the mortgage in November is if you are
going to use your tax free ISA,s !
You are only allowed to save £3600 ( each OH! ) every tax year and if you are getting a good rate 6/6.5% from your ISA,s and will pay less than that on your existing lenders SVR it might be worth clearing as much of your mortgage as you can without cashing in the ISA,s.
Carry on paying your mortgage and overpay if possible and top up your ISA,s when you can. GOOD LUCK

bcfcjwb1

Our current lender's SVR is 7.09%, so I don't think the ISA route will be any good for us.

getmore4less

You should have been using you ISA allowance allready

It is not a good idea to cash them in to pay off the mortgage if you can save more than the allowance each year.

You may have other plans

There are other options to going onto the SVR like offseting FD do a good one.

bcfcjwb1

Thanks for that.

We've gone through all of our options, and paying off the mortgage is most suitable for us.

We just need to know whether leaving ~£1k outstanding is a good idea nowadays.

Thanks

gastroboy

I read somewhere that it might be a good idea to keep a really small amount (maybe just leave £1 outstanding). This is so the bank keeps your land title for you rather than you having to pay a couple of hundred quid to keep it in a safe box or with lawyers.

But you need to make sure that the bank puts a note on your credit file that it doesn't plan on collecting or something like that. This is the important bit but I can't remember what it was so you'll have to try and look it up on the net or just ask your bank.

tracy1_2

bcfcjwb1 wrote: »

Hi,

We're in the lucky position of being able to clear the whole of our £125k mortgage. The 3 year fixed rate of 4.59% is due to come to an end on 31/10/2008.

I was planning to pay off £124k of the balance as I've heard in the past that it is always a good idea to leave ~£1k of the mortgage outstanding.

Can anyone advise if this is true and if so, why it this the case?

Thanks in advance

why have a mortgage if you dont need one .
Have your own deeds at home - they are all kept electronically at the land registry anyhow .
someone told us to keep a bit on the mortgage to 'keep up your credit rating' but hey i don't need credit and just be using a credit card and paying it off will keep my credit rating clear.
well done you on being mortgage free:T

gjchester

bcfcjwb1 wrote: »

Thanks for that.

We've gone through all of our options, and paying off the mortgage is most suitable for us.

We just need to know whether leaving ~£1k outstanding is a good idea nowadays.

Thanks

Most lenders don't offer the facility now, it used to be so they keep the deeds in the vaults. Now they are all in the land registry so it's irrelevent.

We are looking at going from MF to with mortgage to buy a bigger house. The Mortgage brokers said it is unlikely to make any difference to our lendability if we had or had not kept the old mortgate slightly open. In this enviroment, it's the Loan to Value and your salary thats the key factors, anything like existing mortgages are picked up by credit searches, and they can see the status via that, similarly they are looking for people who pay on time and are low risk, nothing more.
The only place it may make a diference is if you have an offset morgage and want to re-borrow the money for something else, but other than that pay them off and enjoy.

bcfcjwb1

Thanks for all your replies.

I think I will contact my lender to see if they offer the facility to keep the mortgage open with a very small balance, if not I'm gonna pay the lot off!!