Nationwide won't allow me to leave £1 on my mortgage

happyshopper

Just a heads up for anybody hoping to leave a small balance on their Nationwide mortgage after redemption for future drawdown or remortgaging - this is no longer possible.

I am in the fortunate position to be able to pay off my mortgage (after much scrimping and overpaying for the last few years). Today I rang my mortgage provider Nationwide to ask for a redemption statement and to check that I can leave £1 on the mortgage, to be told that they no longer offer this facility. This has changed since Feb 2013 when I last enquired and I will now have to pay off in full.

The reason given was that as they no longer offer this facility on new mortgages, they are removing the facility from customers on older mortgage products. I was told that they will be closing all mortgage accounts with very small balances. Ther person I spoke to guessed under £100 but said there isn't a minimum balance.

kingstreet

The option to re-borrow overpayments ended in March 2010 as well.

All part of the tightening of criteria to prevent people being able to borrow without affordability checks.

happyshopper

Thanks kingstreet. I can kind of see that about remortgaging, but I didn't know I couldn't have borrowed back my overpayments! Lucky to have not needed to, but that doesn't seem very fair.

kingstreet wrote: »

The option to re-borrow overpayments ended in March 2010 as well.

All part of the tightening of criteria to prevent people being able to borrow without affordability checks.

kingstreet

Remortgaging is taking a new mortgage with a new lender to repay the existing one, so I presume you mean go back to your lender for more money?

happyshopper

Hi kingstreet, yes I did meant that, sorry for using incorrect terminology. Was thinking that if I want to move in a few years, might be a good idea to leave mortgage open with £1 in it, to facilitate a good deal. I have written confirmation (via NW online messaging system) dated Feb 2013 that I could do this, so they must have changed this particular policy fairly recently. Ah well...not the end of the world.

kingstreet wrote: »

Remortgaging is taking a new mortgage with a new lender to repay the existing one, so I presume you mean go back to your lender for more money?

TrickyDicky101

If you pay off all bar the £1 what exactly would NW do though? You would only get charged interest on the £1 and you can elect to have your repayments set to repay the mortgage over the remaining term (you haven't come to the end of your term have you?).

Thrugelmir

happyshopper wrote: »

Was thinking that if I want to move in a few years, might be a good idea to leave mortgage open with £1 in it, to facilitate a good deal.

Why would doing this facilitate a good deal? A new mortgage would require a full application. You would be treated the same as any other applicant.

Only reason people used to leave a small balance was so that lender stored the deeds, effectively free of charge. Now these are electronic, no longer applies.

happyshopper

Hi TrickyDicky101, thanks for your response. You're right, I haven't come to the end of my term as I have been overpaying. The person I spoke to said that they would just close the account if I left £1 on it. I thought that I had read previously that it was a good idea to do this to maintain a line of credit, perhaps I got the wrong end of the stick. I might leave a hundred on it and see what happens,.

TrickyDicky101 wrote: »

If you pay off all bar the £1 what exactly would NW do though? You would only get charged interest on the £1 and you can elect to have your repayments set to repay the mortgage over the remaining term (you haven't come to the end of your term have you?).

happyshopper

Thrugelmir wrote: »

Why would doing this facilitate a good deal? A new mortgage would require a full application. You would be treated the same as any other applicant.

Only reason people used to leave a small balance was so that lender stored the deeds, effectively free of charge. Now these are electronic, no longer applies.

Hi Thrugelmir, thanks for your response. I think I might have got the wrong end of hte stick from something I read, I think the idea was to maintain a line of credit rather than get another mortgage. But apparently the facility to borrow back my overpayments was removed a while back, so I can't do that anyway. So I guess there's no longer any benefit.

Thanks all!

hs

littlemissbossy

I received a letter about this today.

I guess its no big deal, if I'd wanted to re-borrow my overpayments they were never going to just give me the money back without doing credit checks etc.

Fly_Guy

Although its too late for you now, this is an aspect of Offset Mortgages that I personally find very appealing.

Put value of outstanding mortgage into offset account, set payments to the minimum possible and have them drawn from the offset account. Your mortgage is effectively paid off and is costing you no interest but you can withdraw cash instantly at the interest rate currently applied to your mortgage.

This is my plan as I try to become mortgage 'free' anyway...

FG