To pay off mortgage in full or not and MEAFs

CPG924

I will be paying off my mortgage with the Yorkshire building society in the next week or so. I am considering if its worth leaving a minimal amount left on the mortgage. I know that some providers will allow this in order for them to hold the deeds. However I already possess the deeds. My reason for keeping a small amount of capitol is to avoid having to pay the exit or redemption fee. I have heard that keeping a very small amount in the mortgage means that the cost of administering the loan is more than the provider will make in interest. Therefore the provider waivers the exit fee so you will pay off the capital, end the mortgage and no longer be a loss making burden. I would be interested to know if this is just rumour or it does actually happen and work. Has anyone had experience of this? Your comments would be appreciated.
Thanks.

Thrugelmir

CPG924 wrote: »

I will be paying off my mortgage with the Yorkshire building society in the next week or so. I am considering if its worth leaving a minimal amount left on the mortgage. I know that some providers will allow this in order for them to hold the deeds. However I already possess the deeds. My reason for keeping a small amount of capitol is to avoid having to pay the exit or redemption fee. I have heard that keeping a very small amount in the mortgage means that the cost of administering the loan is more than the provider will make in interest. Therefore the provider waivers the exit fee so you will pay off the capital, end the mortgage and no longer be a loss making burden. I would be interested to know if this is just rumour or it does actually happen and work. Has anyone had experience of this? Your comments would be appreciated.
Thanks.

Why pay interest on a remaining mortgage balance? As eventually the redemption fee will have to be paid. Over the years this will increase in cost.

I'm sure you can find better ways of saving yourself money.

VIGILANT22

Quote: My reason for keeping a small amount of capitol is to avoid having to pay the exit or redemption fee.

CPG924

Thrugelmir wrote: »

Why pay interest on a remaining mortgage balance? As eventually the redemption fee will have to be paid. Over the years this will increase in cost.

I'm sure you can find better ways of saving yourself money.

The idea is that you leave a balance of only a few pounds, the interest on which is pennies. This means that the lender makes a loss on your business with them. In order to cut this loss they ask you pay off the debt and as a sweetener wont charge the exit fee. For all I know this may be an urban myth which is why I asked if others had experience of this type of thing.

VIGILANT22

Quote "For all I know"...........

Has it occurred to you to speak with Yorkshire building society

Thrugelmir

CPG924 wrote: »

The idea is that you leave a balance of only a few pounds, the interest on which is pennies. This means that the lender makes a loss on your business with them. In order to cut this loss they ask you pay off the debt and as a sweetener wont charge the exit fee. For all I know this may be an urban myth which is why I asked if others had experience of this type of thing.

As I said every year they can increase the exit fee. So there's no saving by not discharging the liability for the borrower.

Do you short pay your utility bills by a 1p a time on the basis that the 1p will always get written off?

Leon_W

They can't increase the exit fee.

That was what the whole who-ha a few years back was about with all this reclaiming of exit fees. Lenders did increase these fees willy nilly which made a mockery of the KFI. The FSA told these lenders not to be so naughty in future and charge what was stated on the Key Features.

VIGILANT22

Thrugelmir

Why dont you get yr facts right

motorguy

VIGILANT22 is just trying to wind people up and making himself look sad in the process

VIGILANT22

.......................:t

Thrugelmir

Leon_W wrote: »

They can't increase the exit fee.

That was what the whole who-ha a few years back was about with all this reclaiming of exit fees. Lenders did increase these fees willy nilly which made a mockery of the KFI. The FSA told these lenders not to be so naughty in future and charge what was stated on the Key Features.

I understand that. However if the mortgage isn't redeeemed at the end of its contracted term. As per the contract which the OP is suggesting, but rolls on it forward leaving a small balance. What is the position then? As technically the borrower is in default so has broken the terms of the contract.