Process of paying off a mortgage

visesh

Hello all!

Personal family financial circumstances (read: future estate planning) mean that I am in a position to receive monies which can pay-off my existing mortgage. I have approached my lender and have received a redemption statement, but have not agreed on a redemption date as of yet. I have a few questions I was hoping someone would be able to answer.

1) Do I need a solicitor to help with the paper-work involved? Will my lender deal directly with the land registry or is this something either I or my solicitor need to work on?

2) Is it just a question of sending a CHAPS/faster pay settlement to the lender or is there anything else involved? Family members are happy pay the lender directly rather than it going through my bank.

3) I've got a paper-trail of written communication (emails) from said family members who are kindly helping me out, stating that this will be a gift dated dd/mm/yyyy. Would this be sufficient in the eyes of HMRC (for the purposes of explaining where the money came from and for the purposes of inheritance tax should something happen within the next seven years?) or should I get this formalised by a solicitor or notary?

Any helpful advice would be much appreciated! Thanks!

Retired_Mortgage_Adviser

The following is not formal advice, based purely on a similar situation for one of my offspring, assumes you are in E&W and does not consider whether paying off your mortgage is indeed the best use of the gift you are getting.

1. No you don't need to engage a solicitor. The lender should inform the LR that the mortgage has been redeemed and that they no longer have a claim (charge) on your house. You do not need to complete any documentation as it is the lender who needs to use the discharge form, etc. You might want to check your electronic title deeds to confirm the change 4-5 months later.

2. Yes, you pay the outstanding amount mentioned on the redemption statement to the lender. Especially if we are talking about multiple gifts, I would rather it all came into my account and I then paid it over as one lumpsum to the lender.

3. The lender *might* require proof of source of funds if it's a large amount. A paper trail of money coming in (bank statements) and a gifting-letter from your relative/s should suffice.

visesh

Thanks.

I'm in E&W, family in Scotland. Paper-trail is written comms to me via email, and family are planning to pay the lender directly.

Thanks again for your help.

jaybeetoo

The redemption statement has an 'expiry' date. If you don't redeem by that date you'll need another statement before you can redeem your mortgage.

When I redeemed my mortgage, I received a letter from my lender confirming the mortgage had been paid off and that they had informed LR.