Mortgage soon paid - Close account???

peartrees

Hi all,

Advice please. I am in the very happy position of being about to pay off my mortgage.
Some people say I should keep a small amount of debt to preserve my credit rating and make it easier (and cheaper) to borrow should I need to in the future.
My property is registered so there are no deeds to be kept.

So, should I close my account or keep it open?

Pear Trees

U've_been_framed

A small amount of debt is not going to affect your credit rating. If you do want to borrow in the future you can shop around on this site, or similar ones.
Pay it all off. If you can save the money that you used to pay your mortgage you might never need to borrow again.

WizeOwl

Folks,

I too am in a similar position to PearTree, whereby I have reduced my Interest Only Mortgage to around 27k with over payments and endowment misselling compensation as advised on this site . I currently have a tracker where you are not penalised for partial payments.

I too have been advised to keep the account open firstly -

So as my title deeds are kept in a safe place (although technically the lender still owns them)

Secondly because it can affect your credit rating to pay off a loan early ( 11 years to run)

Thirdly - because in the possible event of becoming unemployed , owning the property outright is seen as an asset as opposed to a debt , an can affect your entitlement to support !

Further to this - I would be looking to purchase 2 x flats as an investment for my 2 kids (3 & 5 years) and would be looking to borrow (buy-to-let) again


An advise would be appreciated !

WizeOwl

cattie

WizeOwl wrote: »

Folks,
Thirdly - because in the possible event of becoming unemployed , owning the property outright is seen as an asset as opposed to a debt , an can affect your entitlement to support !
WizeOwl

This isn't correct unless you actually own more than 1 property. The home you live in is not considered an asset when calculating benefit entitlement.

As a homeowner with a mortgage, if you qualify for income support you will get help towards the interest on your mortgage, no help is available for the repayment part & you have to find the money for this yourself. So having a mortgage doesn't benefit you in anyway financially when claiming benefit, but neither are you penalised for having paid off the mortgage. You end up with the same amount of benefit in either case as DWP pay any mortgage interest due straight to the lender.

peartrees

U've_been_framed wrote: »

A small amount of debt is not going to affect your credit rating. If you do want to borrow in the future you can shop around on this site, or similar ones.
Pay it all off. If you can save the money that you used to pay your mortgage you might never need to borrow again.

Thanks U've been framed. I'm inclined to agree with you. I am just concerned that having no debt whatsoever may actually be detrimental to my credit worthiness.

Pear Trees.