Mortgage free or saved cash?

littlesheepy

Good evening,
Hopefully I’m on track to have enough cash saved to pay off my mortgage when the fixed rate comes to an end in just over 3 years time. However, I’m undecided as yet whether I’d like to stay where I am and be mortgage free or whether to move on to another property, but I’m unsure if there’s any advantages/disadvantages of having an outstanding mortgage if I decide to move. Basically If I decide to move would there be any benefit to paying off my mortgage at that time and then taking out a new mortgage for a new property or would I be better not paying off the mortgage and have the cash in the bank to put towards a new property?
It might not make the slightest difference, but never having moved before, other than as a first time buyer, I’m not sure if there is. Any suggestions? Many thanks

littlesheepy

Anyone?

Unicorn_cottage

I guess in order to give an opinion we need bits of the jigsaw to make an informed decision like...
Are you currently overpaying? What % rate is your current mortgage at? What savings rate do you have? If you moved how much more do you need to borrow? How old are you?

RobM99

I'd suggest speak to your lender.

littlesheepy

Unicorn_cottage said:

I guess in order to give an opinion we need bits of the jigsaw to make an informed decision like...
Are you currently overpaying? What % rate is your current mortgage at? What savings rate do you have? If you moved how much more do you need to borrow? How old are you?

I think the main thing I’m asking, isn’t specific details as such, it’s more for example, if I chose to move tomorrow to buy a £200k house, would there be any difference in having paid my existing mortgage off, getting a brand new mortgage for £100k and having £100k cash, or having my existing mortgage Left for £50k a new mortgage for £50k and £100k cash?

Unicorn_cottage

Well can't really answer that without the details above because it makes such a difference. Say for instance there is no point paying off the mortgage in 1 hit if your early redemption fees are punitive etc. If you are looking at a financial response then we really need details.

littlesheepy

It wasn’t really the specific financials I was looking for and I don’t know how else I can explain it really. Probably better waiting to see if when my fix is up whether I want to move or be mortgage free and investigating then. Thanks for trying to help.

julicorn

I guess the question is whether there is an advantage to having cash in the bank for the purchase rather than just equity, and if so how much? 
I have to be honest, I don't really know the answer to that, but a few things come to mind:
1. The obvious one - having enough money for fees, removals, all that jazz. Will need cash for that, equity doesnt really help.
2. The 10% deposit. Often sellers are happy with deposits just being pushed up the chain and don't insist on the whole 10%, but there are some who are stubborn. We are looking to size up in a few years, buying a house around £200k more than where we are right now, so I'm planning on having £20k in cash just to top up our deposit to 10% (again, might not need it, but better be safe I guess)?
3. Is there any advantage to not having a mortgage on the property you are selling, just in terms of less paperwork in what is already a complex process? I have to admit I have no idea.  It sounds like it would be simpler, but I've never heard of the redemption of the existing mortgage presenting any kind of stumbling block. 


These are just some thought, rather tha actual help I suppose - probably not that useful to you?

littlesheepy

No, that’s exactly more the thoughts I was after, thank you! So to a degree at least, it does sound like having a bit of money in the bank and possibly a little mortgage left might be an advantage than paying off a mortgage to be left with next to nothing in cash. A bit of food for thought, thank you