pay off mortgage with ISA funds

nautilus09

Hi,

I hear of some people keeping a mortgage 'ticking over' with a nominal amount owed - is this really worth it these days?
what, so the bank can look after the deeds (more than likely held online anyway these days), and also to put you in good stead for future loans?

is that right?

anyway, - erring on the side of paying off mortgage completely with ISA funds - question is, how does one actually go about it? just transfer the funds from one account to another online, and that's it, or does one have to go in to the branch?
no overpayment or early redemption penalties afaik!
If done online, would the bank then automatically write saying 'thanks very much' that's it - here's the info on your mortgage and you don't owe us anything' or is more contact with the local branch required, either by phone or actually going in?

thanks in advance!

Gizmo247

It really depends on your bank. Some allow you to transfer between any type of account, others have to go through a current account. Only your lender will be able to advise you on the best mechanism to use.

With regards to keeping the mortgage open, the main reason these days, is because some mortgage products can be offset or allow overpayments to be withdrawn. If the interest rate is low and likely to be low over time then the mortgage acts as a cheap source of borrowing, all be it secured on your home.

With regards to "the deeds", the lender of a friend of mine wanted something like £50 to return the deeds, he refused and told them they could keeps them as they are held electronically. The lender kept offering a lower and lower fee and he kept refusing until they declared that they were required to return the deeds and so gave them back for nothing. :-)

nautilus09

thanks for that - i believe you can just move funds over online from one to account to another, however it's just that when the mortgage balance reaches zero, what actually happens I wonder?
just different balances on one's ISA, Current & Mortgage accounts, and that's it?

interesting about the deeds - will have to see what happens, as further investigation leads me to believe once the mortgage is paid off, one can get the necessary paperwork organised online from the landregistry people, if needed.

as regards to keeping the mortgage open, i believe rates are really low right now anyway - just seen hsbc offering 1.49% fixed for 2 years for starters - that's not bad, so think would sooner just pay the thing off and be rid of it!

thanks again!