Paying off mortgage to a nominal amount

snowmen

Is there an argument not pay off the mortgage fully and leave a nominal amount? - e.g. in the case of wanting to borrow more money in the future.

I know there used to be an argument to leave a nominal amount so that  bank/building society retained your property deeds, but I think these are held digitally now.

400ixl

Nope, just get rid of it

eschaton

As well getting rid. 

Although deeds are held digitally, you’ll probably need to do a discharge of security. I don’t know if that’s only in Scotland and the rest of the UK could be different. 

I went on a 9 month overpayment spree last year. I was going to leave a nominal amount for 6 years to save the £225 mortgage closing fee. I decided to just pay it off. A far better feeling. 

As a bonus, First Active didn’t charge the £225 even although it was listed on every annual statement. I don’t know if this was because I’d repaid and not re-mortgaged but didn’t push for a reason on the unexpected bonus. 

snowmen

Thanks for the replies!

How about the aspect of borrowing more money down the line if you pay the mortgage off fully?
Would that be easier, and at a lower rate, if the mortgage was retained at a nominal amount?

Hoenir

No benefit in holding a nominal mortgage balance. 

silvercar

snowmen said:

Thanks for the replies!

How about the aspect of borrowing more money down the line if you pay the mortgage off fully?
Would that be easier, and at a lower rate, if the mortgage was retained at a nominal amount?

Only if you have an offset mortgage and rather than repaying it you are balancing the mortgage amount in the offset savings account. Then it’s yours for the taking. Otherwise it won’t give you any advantage.

The only advantage I can see is that with the lender having first charge, the risk of a fraudster obtaining a mortgage by falsifying your identity etc is reduced. To mitigate against this you should register for the Land Registry property alert service, which would at least let you know if anyone attempted to put a charge on your property.

penners324

eschaton said:

As well getting rid. 

Although deeds are held digitally, you’ll probably need to do a discharge of security. I don’t know if that’s only in Scotland and the rest of the UK could be different. 

I went on a 9 month overpayment spree last year. I was going to leave a nominal amount for 6 years to save the £225 mortgage closing fee. I decided to just pay it off. A far better feeling. 

As a bonus, First Active didn’t charge the £225 even although it was listed on every annual statement. I don’t know if this was because I’d repaid and not re-mortgaged but didn’t push for a reason on the unexpected bonus. 

Has the legal work been done to remove the charge on the property?

They may only charge that fee at that point.

eschaton

penners324 said:

eschaton said:

As well getting rid. 

Although deeds are held digitally, you’ll probably need to do a discharge of security. I don’t know if that’s only in Scotland and the rest of the UK could be different. 

I went on a 9 month overpayment spree last year. I was going to leave a nominal amount for 6 years to save the £225 mortgage closing fee. I decided to just pay it off. A far better feeling. 

As a bonus, First Active didn’t charge the £225 even although it was listed on every annual statement. I don’t know if this was because I’d repaid and not re-mortgaged but didn’t push for a reason on the unexpected bonus. 

Has the legal work been done to remove the charge on the property?

They may only charge that fee at that point.

The legal work is in progress but the mortgage account is fully closed. 

I queried the £225 as I had estimated the mortgage balance within £30  when I phoned for a redemption balance. The guy just said they don’t charge it and I obviously wasn’t going to push it. 

I do presume it’s because I repaid the balance. It does seem fair as I could have left the mortgage running with a nominal amount until August 2030. They’d have admin costs of annual statement and any rate changes by post as well as DD collection fees.