leaving small outstanding balance

Hi everybody. Have read somewhere that it makes sense to not be completely mortgage free but to leave a very small outstanding balance in case you need to borrow again in a hurry. Has anybody else heard this ? :)

Replies

  • HappyMJHappyMJ Forumite
    21.1K Posts
    Forumite
    Hi everybody. Have read somewhere that it makes sense to not be completely mortgage free but to leave a very small outstanding balance in case you need to borrow again in a hurry. Has anybody else heard this ? :)

    It might save you having to pay redemption fees so yes keep £1 outstanding if that is advantageous to you. There may only be a few pence of interest charged but that's not too bad.

    In regards to a hurry that part is being able to borrow back your overpayments. Not all mortgages allow that. I had an offset mortgage so the balance in the offset account meant I paid no interest on the mortgage and if I ever wanted to I could go into online banking and transfer that to another account without having to apply again.
    :footie:
    :p Regular savers earn 6% interest (HSBC, First Direct, M&S) :p Loans cost 2.9% per year (Nationwide) = FREE money. :p
  • My understanding from reading on this board is that keeping even a small balance means if you ever want to extend it again, you are only applying for a further advance rather than for a new mortgage, which might be easier. But I may well have got that wrong; there are a lot on this board who have looked at it and will know much better!
    Fleabay + Weebuy + Gumfree since started diary 94 items sold, £649.71 clear profit
  • I'd imagine it may be favourable in terms of interest if your on a good deal to be able to withdraw (if allowed on your mortgage) than a potentially unknown interest amount of a new mortgage plus any set up fees.
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