leaving small outstanding balance 28 February 2016 at 11:27AM in Mortgage-free wannabe 3 replies 594 views

archie261210

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 ?

HappyMJ

archie261210 wrote: »

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.

Hollyboll

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!

l1nda83

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.