Mortage paid off - Can i borrow money for other things or only houses ?

jrawle

stylus360 wrote: »

Can i go in and ask for say £50k for new car, build gym, landscape garden, new kitchen.....

I can easily afford the payments and will prob pay it off within 2 years or sooner.

Do I understand correctly: you had, say, a 25-year mortgage, and you have overpaid it massively so that the remaining balance is only £1, but are still within the original 25-year term?

I have a Nationwide mortgage, and as I understand it, you can always "borrow back" money you have overpaid. This is not the same as extending a mortgage, as other people here have implied, it's just retrieving the money you have overpaid. The total of all overpayments made are itemised on the statement each year.

As long as you don't borrow back more money than you would have had if you hadn't overpaid, they shouldn't need to be given a reason. The only thing I'm not quite sure about is, if it's many years since you made the overpayments, how they determine how much of the mortgage you would have paid off at this point had you not overpaid.

This is how I understand the Nationwide flexible mortgage (which is no longer available, I should add). I'd be interested to hear how you get on.

opinions4u wrote: »

Other alternative: Save the money up and earn interest instead of paying it.

While I in general believe in saving for things and not living on debt, I take issue with this remark. The OP has chosen to overpay his/her mortgage rather than put the money into savings. For many people, the mortgage rate will be higher than any available savings rate - especially as tax is payable on the latter - so it makes sense to overpay, particularly if you can get the money back when you need it. Had the OP put the money into savings instead of onto the mortgage, the extra mortgage interest paid would have more than wiped out the return on the savings, and when he/she came to use the savings, the mortgage would still be there so the situation would be exactly the same as it is now (just slightly worse off).

OuterNet

Leave the line of credit open just in case, but don't borrow the money. Remember, any debt you run up will be secured on your property. If you can take the option of saving up for a year and then buying a lovely new car or building your gym, it avoids all of that.