Is it better to keep a mortgage?

lisyloo

I am in a fortunate position to be able to pay off our mortgage later on this year when the term ends. It's currently offset and with First Direct.
I have read in the past that it's worth keeping a mortgage, both for a line of credit and also to prevent fraudulent transactions. Also anecdotally I've heard your more likely to get credit with a mortgage on your credit file.

It would be a low LTV but DH runs a limited company and has 4 years worth of books. I have a permanent job.

How complicated is this? are the benefits worthwhile and will the fees be worth it? For example do we have to pay for another survey if LTV is low? Any relevant experience with FD and does the limited company thing complicate matters?

If I pay off the mortgage I believe the fees are only £149.

goodwithsaving

I find the above is written in a confusing way, but my general thought is, if you are in the position to be able to pay off your mortgage - why wouldn't you? Give me a mortgage free house over keeping money in the bank anyday.

minimike2

No. Pay it off.

jackomdj

It is an offset mortgage, so maintaining the mortgage would not be incurring any interest if you fully offset it. In this instance I would keep it, as it gives you easy access to money if you need it.

I would make sure you do a monthly excercise to transfer money away from your offset pot/pots each month to leave you with just the equivalent of your outstanding mortgage, so you can get interest on the balance. (Unless your surplus does get interest in the offset accounts)

Turtle

jackomdj wrote: »

It is an offset mortgage, so maintaining the mortgage would not be incurring any interest if you fully offset it. In this instance I would keep it, as it gives you easy access to money if you need it.

I would make sure you do a monthly excercise to transfer money away from your offset pot/pots each month to leave you with just the equivalent of your outstanding mortgage, so you can get interest on the balance. (Unless your surplus does get interest in the offset accounts)

Absolutely this. We also have an offset from fd and have essentially owed nothing on it before as it was fully offset. It makes no difference really if you pay it off or fully offset it. What I wouldn't do is close the account. It's always there then if you need to drawdown on it. We're very disciplined with ours, so have used available funds in the past in the same way as a personal loan, and set up a s/o each month to pay it off. Our interest rate is a lifetime tracker at 1% over base, we'd never get that cheap credit elsewhere on an ongoing basis.

lisyloo

goodwithsaving wrote: »

I find the above is written in a confusing way, but my general thought is, if you are in the position to be able to pay off your mortgage - why wouldn't you? Give me a mortgage free house over keeping money in the bank anyday.

The rate is very low so I!!!8217;ve been stoozing I.e. making a profit of a 4 figure sum each year with virtually no risk. Up to you if you would pay it off but if it!!!8217;s negligeable risk I.e. covered by fscs or hm treasury, then I!!!8217;d call that a 5 figure missed opportunity.

Argh, why are my apostrophes coming out weird?

jackomdj

Turtle wrote: »

Absolutely this. We also have an offset from fd and have essentially owed nothing on it before as it was fully offset. It makes no difference really if you pay it off or fully offset it. What I wouldn't do is close the account. It's always there then if you need to drawdown on it. We're very disciplined with ours, so have used available funds in the past in the same way as a personal loan, and set up a s/o each month to pay it off. Our interest rate is a lifetime tracker at 1% over base, we'd never get that cheap credit elsewhere on an ongoing basis.

Ours is with C&G and is 1/2% above base, we even moved and increased it (as that was within the original terms) at the same rate!

Making the banks work for you :)

lisyloo

jackomdj wrote: »

In this instance I would keep it, as it gives you easy access to money if you need it.

The mortgage term ends this year, so I don’t value have an option of just keeping it. I would need to extend/re-mortgage.
I’m asking if the potential costs e.g. survey, legal, mortgage fees are worth the potential benefits.

lisyloo

I wouldn't do is close the account. It's always there then if you need to drawdown on it.

The mortgageterm ends in 2018, so I have no automatic right to keep it open. By default it will end.
What I!!!8217;m asking about is the process of extending/remortgaging both in general and also specific experience with first direct.

For example - would there be legal work to extend the charge (I don!!!8217;t know if charges have an end date in them).
Would there usually be a survey for a mortgage extension?

lisyloo

jackomdj wrote: »

Ours is with C&G and is 1/2% above base, we even moved and increased it (as that was within the original terms) at the same rate!

Making the banks work for you :)

We’re you extending the term?

Did you have to pay legal fees, survey, mortgage application fee?

If all that applies I’m wondering if the costs exceed the benefits?

Thrugelmir

Pay it off. Being an outright home owner. Gives a potential lender a great deal of comfort. Whereas they have no control over what you do with your savings, therefore discount them fully as having no value.

The mortgage redemption fee will be paid whenever the mortgage finally ends. This costs the cost of removing the charge from the property at Land Registry etc.