Should I leave £1 in my Mortgage Account?

Simonsays_2

I am about to pay off my mortgage in full & my mortgage company has suggested I leave it open with a £1 balance. This will give the opportunity of borrowing back the amount I have paid over the length of my morgage approx 21 years.
If I do this will the Nationwide have a charge on my property, so this could affect my credit rating?
Should I just walk away & if I need a new mortgage in the future find a new company?
Are there any other benefits or suggestions?
Thanks

Trying_to_be_good

As far as I'm aware, the only real benefit is maintaining the line of credit - are you planning on borowing again, with this property?

They will have a charge on your property, it's more likely to help your credit file than hinder it (if you have no credit it's difficult to get credit).

Personally, I'd like the satisfaction of knowing it's actually paid off, once and for all!

bulletproof_1979

I'm no expert but it sounds sensible to me, you'll have easy access to a large loan at a good rate at a moments notice - not easy to come by these days!

LeeSouthEast

Agreed. Leave £1 in there but put a £2 on the top shelf in your study marked "DO NOT TOUCH. EMERGENCY MORTGAGE PAYOFF FUND" or something. That way, you have paid it off

It'll be good for your credit rating, and a great emergency fund.

wageslave

The reason people used to leave a quid outstanding on their mortgages was so the building society stored the deeds of their houses free of charge.

Since deeds are easily and cheaply replaced nowadays secure storage isn't such a big thing.

Dont see how the whole line of credit thing works really.

You owe a quid, your line of available credit is...... a quid? It's a mortgage not a credit card.

Or am I missing something really obvious?

joolley

As far as I am aware, if you have a credit card that you use regularly, then you have a line of credit anyway. The days of leaving £1 were before 'easy' crediit. Yes that's changed (ing) somewhat now with the markets as they are but someone with a house paid off and a credit card they use and pay off in full will have access to credit. Unless of course you're unemployed and the rest.

Just my tuppence.

Jool

bulletproof_1979

wageslave wrote: »

The reason people used to leave a quid outstanding on their mortgages was so the building society stored the deeds of their houses free of charge.

Since deeds are easily and cheaply replaced nowadays secure storage isn't such a big thing.

Dont see how the whole line of credit thing works really.

You owe a quid, your line of available credit is...... a quid? It's a mortgage not a credit card.

Or am I missing something really obvious?

I'm assuming the OP has a flexible mortgage. They therefore would have acess to the full amount (or a certain % of it - depending on t&c's) of the loan whenever they want it until the end on the term.

bulletproof_1979

joolley wrote: »

As far as I am aware, if you have a credit card that you use regularly, then you have a line of credit anyway. The days of leaving £1 were before 'easy' crediit. Yes that's changed (ing) somewhat now with the markets as they are but someone with a house paid off and a credit card they use and pay off in full will have access to credit.

This makes sense if you're paying off any loan in full. But what about in the case of an emergency requiring a large amount of cash?

The rate of interest on a cc is likely to be far higher than the mortgage interest rate, and there don't appear to be any cons...

TighterThanTwoCoatsOfPain

All depends on the mortgage terms i guess..

With mine, i can pay down to £1 without penalty, but clear in before the fixed term and it will cost me an Early Redemption Charge.

Additionally, if i paid it down to £1, I can re-draw everything back to the amount I borrowed until the orginal term of my mortgage.. Whilst I am on track to be mortgage free with less than 7 years, i definately will not be redeeming in full unless the terms of my deal change for any reason.

joolley

Bulletproof, I am not suggesting that they have access to credit on a card. Just that they have access to credit in all it's various forms - cc, further mortgage, loan, overdraft etc as they will be a good financial risk with a house paid off and a line of good credit in the form of a cc always paid on time. Further, usinf a cc in a responsible way is enough to keep a line of credit open just as much as keeping a £1 mortgage would. Such a person will always have as much credit as they require.

Joolley