Paying Off the Mortgage Question??

Southpaw

Hi

My parents have an endowment mortgage will now be paying out. So its now possible to pay off their mortgage. I don't have much knowledge on mortgages so would like some advice.

The Mortgage is with the Abbey who have given them 3 options.

1- Pay off the full amount. BUT Abbey will charge a £225 Repayment Fee for closing the account. There will also be a legal charge on the property which must be discharged. And Building insurance will cease.

2- Repay part of the mortgage off then start new repayments.

3- Reduce the mortgage balance to 50p. And continue to pay Building Insurance with Abbey through their mortgage account. Abbey then store the deeds in their deedsafe scheme.




Option 3 is the one which is being considered but what are your thoughts.
Thanks in advance.

jennifernil

They are going to have to pay the fees one day, and they will only go up, unless you mean it is an early redemption penalty?

I would expect they can get cheaper buildings insurance elsewhere, so that is nothing to worry about.

I would go with option 1.

TR4

I agree, Option 1 would be the best.

They'll save money by shopping around for the insurance, and psychologically it would be hard to beat the feeling of not having a mortgage!

Southpaw

What about the fee? Is that a large amount?

Also what about the deeds?

We thought maybe opion 3 was better?

jennifernil

I think the £225 was much less until fairly recently. Have seen on here that some people have managed to get it reduced and refunded afterwards. Worth looking back a little to read the threads about it.

Deeds..........I take it you mean safe storage of? They could get a fireproof safe or get their solicitor to store them. But nowadays these things are all electronically recorded so the paper deeds are not that important any more.

Even if they want to leave a small amount outstanding to get the deeds stored, they should shop around for insurance. The Abbey cannot force them to use their insurance.