Worth having a tiny amount remaining in mortgage for 20 years?

pawlala

Hi, new member here, but long-time browser

I have recently paid off a large sum off my £70000 mortgage and hope to pay the rest off sometime in 2010. I remember someone telling me years ago that their 25 year mortgage is coming to an end and they have only had less than £100 to pay over the past several years to avoid paying charges to release the deeds etc.

My mortgage has no early repayment fees (that bit is in black and white) so can pay any amount without charge. But what actually happens when the mortgage is reduced to £0? Do the bank send you the deeds to your house and is it worth keeping a very small 20 year mortage and pay pennies per month for the priviledge of keeping the mortgage open and the deeds in the bank's possession?

Many thanks

Paula

opinions4u

As the important bit of title deeds is held electronically by the Land Registry there is little benefit to paying interest to allow a lender to retain the paper copies.

In other words you don't need to pay for safe keeping of the papers (although I do keep mine in a fire resistant box!).

The only advantage I can see from what you suggest is that it could make raising capital in the future faster - but not necessarily cheaper.

pawlala

thanks if I decide to move house in the future and wish to borrow more, I could use the same mortgage account as long as I kept it open.. is that what you meant?

P

koexelek

It might be slightly easier to get a new mortgage with a lender if you already have one with them. But if you have a good credit profile and fit lending criteria, you should be able to get a new mortgage virtually anywhere.

JasX

A while back i did here a security argument about people finding houses with zero mortgage remaining, re-directing contact details with the land registry and fraudulently taking out new loans etc....

apparently wasn;t possible if a leander was involved but land registry claim to have tightened their procedures since (was about 1-2 yrs ago)


....probably a minor minor consideration even if true

pawlala

JasX wrote: »

A while back i did here a security argument about people finding houses with zero mortgage remaining

how was this information even available?! If you still have the link to your thread that would be great, I'll have a read

temba

I have wondered about this too. With me, it is not going to be a worry for a couple of years yet... but I quite often have taken lodgers and not paid tax on the income because of the "rent a room" scheme http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_4017804 which allows you to take a certain amount of rent-money tax free in order to help you pay your mortgage. I wonder whether this only counts if you actually have a mortgage outstanding?

temba

Actually - cancel that - I've just reread the webpage and the scheme appears to apply regardless of an outstanding mortgage.

JasX

pawlala wrote: »

how was this information even available?! If you still have the link to your thread that would be great, I'll have a read

Wasn't a specific thread I just remember it being reported in the news / papers a short while back.

This kind of thing

http://news.bbc.co.uk/1/hi/uk/7971612.stm


they went round interviewing 'victims' at the time and found people who'd paid off their mortgages years ago but when they came to sell couldn't as someone had redirected their land registry correspondance and fraudulently transferred ownership and re-mortgaged.

where there is an existing mortgage the mortgage holder gets informed and will have systems in place to follow up (as transfer of ownership will obv affect their outstanding loan so its much harder)

although a homeowner will get a notification of LR changes bei ng made without their knowledge if they don't realise what it is and act they can find they've got problems further down the line.....

but again, small probabilities of being a victim and well down the list mortgage considerations, more something to be generally aware of

EDIT: also more info at http://www.lettings-landlords.co.uk/info/land_registry.html

sabretoothtigger

Just leave the mortgage at £100 and it wont cost anything? Can only be in your favour to best of my knowledge

pawlala

yeah, thanks!