Pay off mortgage completely ?

cisamcgu

Dear MSE's

My wife and I will be finishing our Lloyds mortgage in about 5 months. It is an interest only mortgage, but we have been overpaying it anyway when we could.

The question is : Is there any benefit in stopping payments when the balance is, say, £500 and then continuing to pay the interest (~£12 per year) for the next 10 years (length of remaining mortgage term). Or is it best to pay off the whole lot ?

In the past there used to be some issue with looking after the deeds of the house - so letting the mortgage run so the Bank would do that, but I am not sure this is an issue now (but I may be wrong).

Any thoughts ?

Thanks

jaybeetoo

I can’t see any reason not to pay it off. That’s what I did. My house insurance went down after I did!

phillw

cisamcgu wrote: »

In the past there used to be some issue with looking after the deeds of the house - so letting the mortgage run so the Bank would do that, but I am not sure this is an issue now (but I may be wrong).

If you bought since 1990 then your property is registered electronically and your lender probably doesn't have the deeds.

If your property was bought before 1990 then when you get the deeds back then I believe the first registration on the land registry is free.

If your lender allows you to borrow back overpayments or the interest rate is lower than your savings, then it might be worth keeping the mortgage. But generally IMO you are better off paying it off.

cisamcgu

Thanks both

Mortgage_Adviser

The only benefit of not paying it off is if you are planning to borrow for a buy to let (Eg buy one more property) in a near future.
Some lender's apply the same less favourable criteria to the buy to let owners wih no mortgages as they would to the first time landlord or first time buyers.

cisamcgu

No plans to buy a second property.

Thanks for the advice