The end of it?

david78

I am a big believer in overpaying into a mortgage to save interest. I have been doing this for 8 years or so. Over the last two years I have further reduced the interest I am paying by paying in substantial lump sums from 0% credit cards (thank you Egg, Halifax, MBNA and Tesco ) and by transfers from savings accounts. I have kept my Cash ISA savings separate and intact for the future though.

In a few months or so I will be in the nice position of having my mortgage balance reduced to £0 (or a hundred pounds or so) some 13 years early. All the credit card balances will also be paid off or the money to pay them off at the end of their term will be in my ING account.

I have made a record of the lump sum overpayments which I have transfered from other savings. These represent my short term emergency fund. Because my mortgage is fully flexible I have access to these at the moment if I need them but obviously I will lose access to these if I redeem my mortgage. (I would have to remortgage with all the fees etc).

I am therefore hoping to keep the balance on my mortgage at £0 (or as small as I can) for twelve months or so and then re-build another emergency cash fund by saving the money from my earnings which I will no longer need to pay the mortgage.

What's the position here. Can I do this, or will I have to redeem? Anyone have any experience of this.

Walletwatch

While I have no personal experience on doing this, I am sure there is nothing stopping you from keeping the mortgage alive with a miniscule amount outstanding for any amount of time till the end date of the mortgage - the only difference between paying it off with your savings and keeping it alive and offsetting it with your savings is the fact that by keeping the offset, you effectively have an overdraft available (progressively reducing one though) to the extent of the unpaid amount on the mortgage at the low interest rate that you pay on the mortgage (will definitely be lesser than an overdraft facility which a Bank will offer you for that amount)

From a rational viewpoint, why give this up, as this keeps the option open of cheap credit, should you need some tomorrow, and if you don't have the luxury of time to apply for another 0% card and wait for the money. Of course, there may be other reasons for paying off the mortgage, like wanting to sell the underlying asset, or wanting to become debt-free, in which case the considerations are more emotional and rational...

cloud_dog

Some lenders positively encourage you to leave a small amount owing so that your deeds remain safe without the need to pay someone for that service or get a fireproof (etc) safe.

I know my parents had £1 left on their mortgage with Bristol & West for a number of years; this was even after the term of the mortgage had completed (i.e. 25 yrs).

Best thing to do is to talk to your lender and see what they would be willing to do.  After all I'm sure they'd rather keep you as a customer / on their marketing lists than loose you.

cloud_dog

Oh, btw I was going to say lucky bar steward but I know it's not luck, and it must have taken a lot of dedicated finacial hard work to acheive what you have done. I should be so lucky, lucky, lucky ;D

One word for you - ENJOY 8)