Paying Off the Mortgage - Is there a downside?

Rod1883

I Posted this in the Mortgage/endowment forum by mistake earlier, this is the beter forum....

I'm in the fortunate position that we (my Wife and I) may be able to pay off all, or very nearly all, of our outstanding morgage debt (circa £48k) when the current fixed rate deal comes to an end at the end of July this year. If we cannot quite pay off the full total there and then, I intend to pay the remainder within four to six months.
My question: Is there a downside to this - should we leave a small nominal amount on the mortgage so that the lender continues to hold the Deeds* 'free of charge' and we avoid any redemption fee? Are there any other downsides to being mortgage free?

I would welcome views/thoughts.
*Also, What happens to Deeds when you are mortgage free?

Rod.

alanobrien

If you have deeds and a not all properties do these days, they will be sent to you once the mortgage is cleared.

Deeds are largely irrelavent in terms of who legally owns a property these days anyway. Its the name on the land registry entry that counts.

Deeds are of use to discover original covenants etc, especially if you feel the need to attempt to enforce them at any time.

If it were me, i would go for it and rid myself of the mortgage. Good luck to you.

trackaccessgirl

It would depend on the redemption conditions of your mortgage? If paying off the full whack means paying a fee, then you might be best leaving a little in there and not paying off the fee. However if there is no fee/a relatively small fee to pay, GO FOR IT and pay off the mortgage. When you are mortgage free, just think that your combined income will be yours to spend entirely as you please. Why pay a bank interest if you can afford not to?
You can have the deeds kept in a safe relatively cheaply once they are yours,and most people get a copy to keep at home as well

Thefunkygibbons

The redemption fee will be payable one day anyway and as long as it is the standard amount (which tends to be £300) rather than a penalty amount running into £000s, then it is worth just paying it off

susank

I hope to be in the same position in the summertime to pay ours off too and wonder along with the redemption fee which I am trying to check out at the moment i- what happens to the endowments which were intended to be used as payment off a mortgage. Do we still just pay them for the next 6 years and then they pay out tax free?

Rod1883

Thanks to everyone for their comments so far.
Responding to Susank - we have/had two endowments, I've surrenderred one to form part of the pot of money to pay off the mortgage this summer. The second (with Standard Life) we're letting run for now. We'll take the demutulisation money and then either surrender or let run to full term when it will give us a nice lump sum (although short of the original target). As far as I am aware there is no tax or any other laibility when it matures (or is surrendered) even though it isn't linked to a mortgage any longer.
Perhaps someone else can also comment on this?
Rod.

Craig_A

In light of the discussion on the main mortgage board (regarding the lenders increasing their redemption fees at ridiculous rates) I would pay the thing off as soon as possible. You'll also benefit from a change in your outlook once it's all finished and paid up... Good luck!

Craig_A

Rod
I read here earlier that, so long as the endowment runs for more than 10 years or at least 2/3 of the original term, the cheque you receive upon surrender will be tax free.

halloweenqueen_2

My parents kept their deeds with the solicitor? Is that a good option, was told it was free of charge.

Decadent_Fool

Regarding deeds, pay for voluntary registration of land with the Land Registry, and then (as already mentioned) the deeds aren't needed.

Your proof of ownership is guarenteed by the state

seven-day-weekend

Hi I'm new here, just registered.

Would just like to say that there is NOTHING LIKE the feel of having no mortgage. We paid the mortgage off on our family home abour five years ago, then last year sold an investment property and got rid of that one too. Now we owe nobody anything, it's a terific feeling!

Just go for it if you can, it's great!