Critical Illness payment, Mortgage

cas100uk

Hi all,
Just had word that a critical illness cover will be paying out and will cover the mortgage. Wondering if it is best to pay off all the mortgage or leave a certain amount left on to give us some free money in the short term and also I had heard in the past that leaving a small proportion of mortgage is a good idea anyway. Probably be speaking to a IFA but any ideas or experience from others will be useful.

Thanks.

IdrisJazz

Maybe check whether you will incur a penalty by paying off early. This could be fairly significant, and could possibly be worth continuing to pay to the end of your fixed rate period (if it's not too far off) and pay it off then.

The only benefit I can think of for keeping a mortgage in place is that it can contribute to a healthy credit rating.

If it were me, I'd want to be shot of it. I paid off my first mortgage in my 30s and it was great to receive the letter saying it was fully paid off. 

I'm sure an IFA would have plenty of ideas of what to do with your increased disposable income, and would probably come with some suggestions you wouldn't have thought of.

Hope everyone is well in the circumstances...

cas100uk

IdrisJazz said:

Maybe check whether you will incur a penalty by paying off early. This could be fairly significant, and could possibly be worth continuing to pay to the end of your fixed rate period (if it's not too far off) and pay it off then.

The only benefit I can think of for keeping a mortgage in place is that it can contribute to a healthy credit rating.

If it were me, I'd want to be shot of it. I paid off my first mortgage in my 30s and it was great to receive the letter saying it was fully paid off. 

I'm sure an IFA would have plenty of ideas of what to do with your increased disposable income, and would probably come with some suggestions you wouldn't have thought of.

Hope everyone is well in the circumstances...

Hi, many thanks for your reply. Hard times at the moment but getting through 1day at a time.

There is some suggestion from the mortgage company that they would wave any early repayment charges providing there is evidence of the critical illness payment which seems very good of them. We are leaning towards paying the whole thing off, like you say it would be great to know that was sorted.

Many thanks again.

Sandtree

IdrisJazz said:

The only benefit I can think of for keeping a mortgage in place is that it can contribute to a healthy credit rating.

Mortgages arent my area of expertise but I know others have stated they run a very small mortgage because if they wanted to raise significant funds it would be easier to extend an existing mortgage than apply for a new one on an unencumbered property. They were not thinking just from a credit rating perspective as they had other credit products. 

They could be totally wrong but they were convinced of the fact.