Leaving a £1 mortgage in place

814man

I am in the very fortunate position of having been left some money which will enable me to pay off my mortgage. Having contacted Nationwide their advice is to pay off the total sum but leave £1 owing and the mortgage in place. Their reasoning is that should I want a mortgage in the future then it will be easier for me if I already have one rather than having to start again from scratch.
I’m not too sure about this having never heard of such a situation and am wondering if the more cynical view would be that they are simply ensuring that if I want another mortgage in the future then Nationwide will be my first choice.
Any advice about this, or indeed any aspect of paying off a mortgage would be great, it’s not something you do very often.

dwsjarcmcd

There reason is nonsense, if you want to borrow any more than £1, you would be underwriten again. There used to be good reason for this, in that by leaving a nominal balance they would store your deeds but that doesn't really apply in these days of electronic deeds storage.

I suspect the real reason is that as you remain a customer, they can market their products to you.

David

opinions4u

It would be much faster to borrow money from Nationwide.

But it would be slightly slower if you wanted to borrow from an alternative lender.

Realistically, are you likely to want to borrow against your property again?

castle96

same position myself......

If I pay off completely, ,there is an admin fee of £90
leave £1, no £90 fee (pay off £1 later, then there is no fee)

Gorgeous_George

castle96 has hit the nail squarely on the head.

If I was repaying my mortgage, I'd pay the whole lot off just for the satisfaction of being mortgage free.

What rate is your mortgage? If it is 2.5% I wouldn't pay any of it off. Instead, save at a rate higher than 2.5% net and you can make the money work better by keeping the mortgage.

GG

Lily1

Hi, sorry to butt in, we have £750 left on our mortgage which is due to run until Jan 2018. We have cut the mortgage length in half due to work reasons. I am loathe to pay a ERC of £225 when the interest rate is 1.49, though the psychological idea of being 'mortgage free' is overwhelming.

As the mortgage is with First Active who are no longer offering mortgages to new customers, what are the chances they may remove the charge after the annual re-calculation in Jan just to get us off their books and to reduce admin on such a small mortgage?

bluecelticgirl

If you have a redraw facility on your mortgage by leaving a small balance you can redraw the funds at any time in the future if you need to

Gorgeous_George

Lily1 wrote: »

... what are the chances they may remove the charge after the annual re-calculation in Jan just to get us off their books and to reduce admin on such a small mortgage?

Commonmsense suggests that they ought to waive the charges. Unfortunately, commonsense has proven rather elusive to our financial wizards.

Why not draw the mortgage back out and save it a double your mortgage rate?

GG

Lily1

Hi, thanks for replies I know the sensible thing would be to drag out payments but we have decided to start 2011 mortgage free.

shortchanged_2

Don't forget if you default on your £1 they will repossess your house. :rotfl:

lr1277

There might be a reason to leave £1 on your mortgage. There was a post on here some time ago, that linked to the transcript of a Radio 4 programme. I can't remember the exact posters name or the board it was on.

Apparently if there is no 'hold' on your property by a mortgage company, then fraudsters contact the land registry and change the ownership details. In the case of people in the article below, they couldn't then sell a house as they no longer owned it.

News article here:
http://news.bbc.co.uk/1/hi/uk/7971995.stm

I think the transcript of the R4 programme mentioned obtaining monies based on fraudulent ownership of said house, but I can't find a link to that transcript.

Apparently you can listen to the R4 programme from a link on the above web page.