Is Having No Mortgage A Disadvantage?

bfgun

I am working hard to pay off my mortgage but I wondered whether doing so could affect my credit rating in future?

I have heard of some people keeping a very small balance on their mortgage to avoid such.

Is there a disadvantage to having no mortgage or a valid reason for keeping one open with a small balance?

DreamerV

I keep mine open with a nominal balance to avoid an admin fee to release it. I also am happy with the deeds being stored with the Building Society.

bfgun

DreamerV wrote: »

I keep mine open with a nominal balance to avoid an admin fee to release it. I also am happy with the deeds being stored with the Building Society.

Do you not have to continue monthly payments and incur interest?

molerat

As long as you have some other traceable credit such as credit card, phone contract, loans and bank account paying off the mortgage should not make any difference. It will show up as settled on your file so should be a "positive" marker for 6 years.

DreamerV

bfgun wrote: »

Do you not have to continue monthly payments and incur interest?

No, it shows on my online banking as £1 but I don't need to do anything with it. If I was to get rid of it one day, I would insist a solicitor hold the deeds (I've heard some do that for you). The one complicated thing I find now is when applying for anything, where the question is asked "Do you own your property outright or is it mortgaged?". It is technically mortgaged, but that's not what they mean. As an aside I don't live in that house, and the questions when applying for credit, etc. often ask "Do you own the house you live in?". I think apart from certain questions being awkward to answer, there isn't a problem with keeping a nominal balance on the mortgage.