Repay the mortgage completely or leave it outstanding with a small amount??

eldaniel

Hi all,
I was wondering what are the benefits of repaying the mortgage completely (assuming that there is enough money to do that) vs. leaving it with the small outstanding amount. It is a bit early question in my situation, but always good to know in advance.

Pros and cons from my understanding so far

Pros of leaving a little bit outstanding:

• I have read somewhere that it is good to leave mortgage outstanding with a little bit of money (i.e. £1000) because then you don't have to worry about keeping documents secure that you are an owner. Let's bank worry about that.
• If you overpay then you can always redraw some money if you need extra cash.

Pros of paying off completely:

• Not having complete satisfaction that you are an owner of the property
• Don't have to worry about security of my mortgage account online.
• When I want to buy different property then probably it would be easier to part exchange/sell if property is 100% paid off (not sure if that is true actually)

I am sure the reasons above are probably quite rubbish and hope you can give me some better reasons.

kingstreet

New mortgages tend not to have re-draw options and now there's no deeds, as such, leaving anything outstanding is pointless.

Check your own mortgage for re-draw facilities, just in case.

eldaniel

I can redraw on mine, although I did not overpay much, but I am planning to do so. Was not aware of the deeds situation - thanks.

eldaniel

So, what happens when someone repay the mortgage? Surely everyone has to have some kind of proof that the mortgage is paid off and house is their?

Goldiegirl

There's no point these days in keeping the mortgage open for the purpose of keeping the deeds safe. Everything is held electronically these days, and the Title Deeds are effectively just historical documents.

The Deeds don't have to be held securely anymore, and most lenders have stopped the 'Deedstore' type schemes because the service is no longer needed.

Also, the mortgage isn't a type of savings account. If a person has been making ad hoc over payments, it would put the account in to advance, and some lenders may let a borrower have the advance payments refunded, but this practice is not encouraged.

You could keep the account open if you wanted to apply for a further advance at some point in the future, but that would be subject to the lenders current underwriting criteria. That's the real reason for keeping a mortgage open

Goldiegirl

eldaniel wrote: »

So, what happens when someone repay the mortgage? Surely everyone has to have some kind of proof that the mortgage is paid off and house is their?

The charge is deleted at the Land Registry.

The lender would confirm in writing that the mortgage has been redeemed

eldaniel

Thank you very much to you both. All clear. Now I just have to work hard to be able to repay my mortgage completely

Joe_Bloggs

How secure are land registry records ?
How complete are land registry records ?

This is no criticism of the land registry in particular but it appears to me that motivated hackers will try and manipulate computer based information if they think they could benefit.

Who is to say who owns what and what is the proof of the claim if it all lies on a computer !

eldaniel

Joe_Bloggs wrote: »

How secure are land registry records ?
How complete are land registry records ?

This is no criticism of the land registry in particular but it appears to me that motivated hackers will try and manipulate computer based information if they think they could benefit.

Who is to say who owns what and what is the proof of the claim if it all lies on a computer !

You have got the point, but on the other hand you must be able somehow to prove it. Mortgage statement etc...

Land_Registry

As Goldiegirl states many lenders have stopped the 'deedstore' schemes probably due to the costs of storage outweighing the benefits of their being a small amount outstanding on the loan.

When a mortgage is paid off most lenders notify us direct and then forward the resulting copy of the land register to the borrower to confirm.

As long as the property is in England & Wales and registered then the old deeds are primarily of historical value although we never recommend to destroy them as sometimes for example they can prove to be useful in settling disputes that may arise at a later date

As far as how complete are our records are concerned much relies on being informed, through application, that such changes have occurred. When the mortgage is paid off it is for the lender/borrower to apply to have it removed from the register.

As far as how secure the records are for example from hacking I am sure you will appreciate that we cannot go into any details around the security which is in place. However as you would hopefully expect we do have extensive security, including back up processes to replicate records in real time and hacking tends to be disruptive in it's aim rather than trying to manipulate records.

And one of the main benefits of having an electronic register is that it can be backed up, copied and kept secure where paper deeds are at greater risk to loss, damage and fire

kingstreet

Land_Registry_representative wrote: »

many lenders have stopped the 'deedstore' schemes

which gathered pace after the B&B Deedstore fire in Birmingham.

http://www.thefreelibrary.com/Blaze+gives+building+society+major+headache+over+deeds.-a060703355