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Any reason not to pay off the mortgage before moving?
laptop80
Posts: 203 Forumite
We will be looking to move house in the new year, and the new house will probably cost half again what our current house is worth (when you think you're out they pull you right back in again).
I will be in a position to pay off the remaining mortgage on our current place next week (tracker, no ERC) but I'll need to take out a new mortgage when we move.
Someone we know advised us not to pay off the current mortgage as it would likely affect our creditworthiness. I can't quite get my head around the logic here - we will need to borrow the same amount for the next mortgage regardless, and I doubt the bank would let us increase the current mortgage for the new debt as it's a lifetime tracker of the type/rate that they don't offer anymore.
Is there something I'm missing? I know if I pay it off I'll be saving more in interest payments than I'd earn putting it in a savings account.
I will be in a position to pay off the remaining mortgage on our current place next week (tracker, no ERC) but I'll need to take out a new mortgage when we move.
Someone we know advised us not to pay off the current mortgage as it would likely affect our creditworthiness. I can't quite get my head around the logic here - we will need to borrow the same amount for the next mortgage regardless, and I doubt the bank would let us increase the current mortgage for the new debt as it's a lifetime tracker of the type/rate that they don't offer anymore.
Is there something I'm missing? I know if I pay it off I'll be saving more in interest payments than I'd earn putting it in a savings account.
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Comments
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I'm in a similar situation to you and have decided to keep a nominal amount on the current mortgage (c. £100)- to avoid paying the £70 redemption fee0
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Repaying the mortgage will have no effect on your credit worthinessI am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
Thanks, this was what I thought but good to hear from someone working in the industry.butterflybook wrote: »Repaying the mortgage will have no effect on your credit worthiness0
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