Pay Off All Mortgage Or Leave A Bit?

RandAMS

We're in a position to pay off our mortgage, but should we pay it off completely or leave a small amount outstanding? We have heard that simplifies matters if we ever want to move house in the future.

Regards,

Robert & Anne-Marie

sparvar

Don't know if this answers your question but may hopefully give you another idea, I have a friend who kept a small amount outstanding on her mortgage (I think around £50?) as otherwise she would have had to pay for safekeeping of her deeds and this is a apparently a far cheaper way (her son is a bank manager).

Best of luck, if you can't decide you're welcome to pay mine off for me

Dithering_Dad

Hi, the deeds are held electronically now and so you don't have to pay the bank to hold onto them. You receive the paper deeds when you pay off your mortgage, but they have no further use - except as an interesting historical document if your house is over a hundred years old.

As far as making it easier to get a new mortgage, this may be the case because you are maintaining credit history, though if you have a large deposit for your next home (which your mortgage free house represents) then I doubt a bank will have any issues with lending you money. Plus, you can maintain a credit history with credit cards, and if you pay them off at the end of the month, it won't cost you a penny - unlike keeping a small mortgage going.

Call_Centre_Guru

Nationwide allow you to reduce down to a pound so you pay zero interest, store your deeds for free and allow you to draw down on the mortgage again should your circumstances change provided it is within your original term without paying set up fees.

butterflymum

Had wondered about this too, RandAMS. Alliance & Leicester had something similar to Nationwide (see Guru's post above) called 'Deedcare', but when we recently enquired about it in branch, they said this was no longer available. Does anyone know differently?

Dithering_Dad

the deeds are held electronically now and so you don't have to pay the bank to hold onto them. You receive the paper deeds when you pay off your mortgage, but they have no further use

davidlizard

I vaguely recall that a small minority of deeds are not presently stored electronically - for example a few from properties that have not been sold since something like 1990 are not yet electronic ? But I am sure someone will correct me on that.

We recently took our mortgage down to a "nominal" £1 which meant we did not have to pay the mortgage redemption fee, and were assured by the Building Society that as an existing customer would not have to pay as many fees if we ever took a mortgage out with them in the future (for example, we extend). Also, for the nominal £1, interest is not charged.

So another question is if my mortgage is just £1, do my Building Society still have a "charge" on my house, and if I want to move, do they need to become involved?

FWIW, we changed gas/electric providers recently, and they wanted to put us onto a pre-payment meter as after running a credit check and noting the abrupt halt of mortgage payments, they thought we were having some kind of problem, however a telephone call put that right.

Kaz2904

The building society will always have a charge on your house when you owe them money.
One of the risks that you run by holding onto a £1 mortgage is that you will have to pay higher costs when you do decide to pay it off.
Even if your deeds are not yet electronically stored, the land registry has to get involved to remove the mortgage company off the deeds. In doing this they will change the deeds and will therefore put them through the system.

There shouldn't be any issues with ever being able to raise another mortgage because you will have the equity in your present home.

Too_Bloo

My wife and I have been fortunate enough to pay off our mortgage recently,Alliance and Leicester. They sent our deeds and other paper work back to us including notification that under Scottish law, we would have to get a soliciter to sign a discharge of mortgage, This has cost approx £182.00. So we might have been better off keeping a small amount of mortgage debt. The soliciter did tell us that if we did lose the deeds, that it was fairly easy to obtain a replacement and that very soon there would be no reason to keep a paper copy at all as everything would be kept electronically anyway.

butterflymum

:eek: ...

Too_Bloo wrote: »

My wife and I have been fortunate enough to pay off our mortgage recently,Alliance and Leicester. They sent our deeds and other paper work back to us including notification that under Scottish law, we would have to get a soliciter to sign a discharge of mortgage, This has cost approx £182.00.

We were also very fortunate to be able to pay ours off in a local branch recently. No-one mentioned any such potential charge (we are in Northern Ireland), nor has their Customer Services telephone advisors, so hope we are not in for a shock when our paperwork is sent out. Does anyone know if this 'discharge of mortgage' will apply here too?