The £1 mortgage........

Rikki

Why do some people maintain a £1 mortgage after the mortgage has been paid off?

What are the advantages or disadvantages?

DreamerV

I do this, I'm happy for them to safeguard the deeds, and also I don't need to pay the approx £250 to release myself from the mortgage completely. What I never know, is whether to fill in on other forms whether I own my own house outright, or with mortgage.

cash-magnet

Consider the situation if the only debt you hold is to your mortgage lender. I consider I own my place even though technically I have a mortgage for the next 2 years, and I must still declare myself as such on forms. From another lenders/banks point of view, they want to see you can manage your money and financial commitments and your mortgage payment carries quite a bit of weight, so by keeping my mortgage open on a tiny amount and in my case paying my 37pence each month, I am demonstrating my ability to maintain my payments. It's a silly amount I know, but it keeps everyone happy that I never miss my payments and am possibly a lower risk, depending on how their own scoring system works.

NationWide also questioned this and I said I might need another mortgage from them if I decide to move and this will allow them to see I have never missed a payment, plus all the above, and the guy on the phone agreed that regular payments are a good thing and why had he not thought of it before?

Rikki

My mortgage is my only debt. Any credit card spending is paid off each month.
So basically without a mortgage you loose/damage your credit rating.

This makes sense now.

Dan_1976

They will keep your deeds safe and you have an open line of credit if need be, it leaves you with options. Although I think it may need to be more than a £1.

SailorSam

I think the time when leaving £1 outstanding on your mortgage so as the building society would keep your deeds safe, is a thing of the past.
If i'm not mistaken all 'deeds' are now kept only on-line, as bits of paper they don't exist.

DreamerV

SailorSam wrote: »

I think the time when leaving £1 outstanding on your mortgage so as the building society would keep your deeds safe, is a thing of the past.
If i'm not mistaken all 'deeds' are now kept only on-line, as bits of paper they don't exist.

http://www.thisismoney.co.uk/news/article.html?in_article_id=426009&in_page_id=2

I don't think it is a thing of the past. My deeds are locked away in a nationwide vault. I think the way documents are stored (where they are stored) is different in Scotland/England. I don't know where I got that idea from though, I just have a vague recollection of having that explained to me. It might be that up here, ours are with the actual banks, and down there with the actual land registry? I have no idea. But the article I've posted a link to, suggests the deeds are not kept wholly online

chris0241

I have been fortunante enough to pay off my £150K mortgage in 2 years thanks to hard work and saving. However, I've left around £50 on it and have monthly repayments which are a whopping 19p. The benefits in my head are:

* They hold my deeds (I thought they were paper, maybe the Land Registry has been updated but when I took the mortgage out 2 years ago they were physical)

* I don't borrow other money so it keeps my credit record clean as I never miss the 19p per month repayment.

* It's an offset mortgage, so in the unlikely event of me needing finance for whatever reason, I can instantly borrow back £149,950 without any arrangement fees or applications to go through.

* Why should I have to pay £300 to end the mortgage early?

* It costs Barclays/Woolwich to operate, which makes me feel good given the way they treated me when I was struggling for money! ;-)

Chris

littlemrtinkle

why leave £50, why not leave £1 and pay less interest lol

chris0241

Good point, I'm off to my local Barclays now! LOL

smckay

I also think it is encouraged by some mortgage providers to assist with their numbers.

Halifax have quite a few £1 accounts which used to help them say they were the biggest mortgage provider!?