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  • FIRST POST
    • lisyloo
    • By lisyloo 10th Feb 18, 8:33 AM
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    lisyloo
    Is it better to keep a mortgage?
    • #1
    • 10th Feb 18, 8:33 AM
    Is it better to keep a mortgage? 10th Feb 18 at 8:33 AM
    I am in a fortunate position to be able to pay off our mortgage later on this year when the term ends. It's currently offset and with First Direct.
    I have read in the past that it's worth keeping a mortgage, both for a line of credit and also to prevent fraudulent transactions. Also anecdotally I've heard your more likely to get credit with a mortgage on your credit file.

    It would be a low LTV but DH runs a limited company and has 4 years worth of books. I have a permanent job.

    How complicated is this? are the benefits worthwhile and will the fees be worth it? For example do we have to pay for another survey if LTV is low? Any relevant experience with FD and does the limited company thing complicate matters?

    If I pay off the mortgage I believe the fees are only £149.
Page 1
    • goodwithsaving
    • By goodwithsaving 10th Feb 18, 10:14 AM
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    goodwithsaving
    • #2
    • 10th Feb 18, 10:14 AM
    • #2
    • 10th Feb 18, 10:14 AM
    I find the above is written in a confusing way, but my general thought is, if you are in the position to be able to pay off your mortgage - why wouldn't you? Give me a mortgage free house over keeping money in the bank anyday.
    Every time you borrow money, youíre robbing your future self. ĖNathan W. Morris
    • minimike2
    • By minimike2 10th Feb 18, 10:34 AM
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    minimike2
    • #3
    • 10th Feb 18, 10:34 AM
    • #3
    • 10th Feb 18, 10:34 AM
    No. Pay it off.
    I am a mortgage industry professional. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice
    • jackomdj
    • By jackomdj 10th Feb 18, 10:36 AM
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    jackomdj
    • #4
    • 10th Feb 18, 10:36 AM
    • #4
    • 10th Feb 18, 10:36 AM
    It is an offset mortgage, so maintaining the mortgage would not be incurring any interest if you fully offset it. In this instance I would keep it, as it gives you easy access to money if you need it.

    I would make sure you do a monthly excercise to transfer money away from your offset pot/pots each month to leave you with just the equivalent of your outstanding mortgage, so you can get interest on the balance. (Unless your surplus does get interest in the offset accounts)
    • Turtle
    • By Turtle 10th Feb 18, 10:40 AM
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    Turtle
    • #5
    • 10th Feb 18, 10:40 AM
    • #5
    • 10th Feb 18, 10:40 AM
    It is an offset mortgage, so maintaining the mortgage would not be incurring any interest if you fully offset it. In this instance I would keep it, as it gives you easy access to money if you need it.

    I would make sure you do a monthly excercise to transfer money away from your offset pot/pots each month to leave you with just the equivalent of your outstanding mortgage, so you can get interest on the balance. (Unless your surplus does get interest in the offset accounts)
    Originally posted by jackomdj
    Absolutely this. We also have an offset from fd and have essentially owed nothing on it before as it was fully offset. It makes no difference really if you pay it off or fully offset it. What I wouldn't do is close the account. It's always there then if you need to drawdown on it. We're very disciplined with ours, so have used available funds in the past in the same way as a personal loan, and set up a s/o each month to pay it off. Our interest rate is a lifetime tracker at 1% over base, we'd never get that cheap credit elsewhere on an ongoing basis.

    • lisyloo
    • By lisyloo 10th Feb 18, 10:53 AM
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    lisyloo
    • #6
    • 10th Feb 18, 10:53 AM
    • #6
    • 10th Feb 18, 10:53 AM
    I find the above is written in a confusing way, but my general thought is, if you are in the position to be able to pay off your mortgage - why wouldn't you? Give me a mortgage free house over keeping money in the bank anyday.
    Originally posted by goodwithsaving
    The rate is very low so I!!!8217;ve been stoozing I.e. making a profit of a 4 figure sum each year with virtually no risk. Up to you if you would pay it off but if it!!!8217;s negligeable risk I.e. covered by fscs or hm treasury, then I!!!8217;d call that a 5 figure missed opportunity.

    Argh, why are my apostrophes coming out weird?
    Last edited by lisyloo; 10-02-2018 at 11:04 AM.
    • jackomdj
    • By jackomdj 10th Feb 18, 10:54 AM
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    jackomdj
    • #7
    • 10th Feb 18, 10:54 AM
    • #7
    • 10th Feb 18, 10:54 AM
    Absolutely this. We also have an offset from fd and have essentially owed nothing on it before as it was fully offset. It makes no difference really if you pay it off or fully offset it. What I wouldn't do is close the account. It's always there then if you need to drawdown on it. We're very disciplined with ours, so have used available funds in the past in the same way as a personal loan, and set up a s/o each month to pay it off. Our interest rate is a lifetime tracker at 1% over base, we'd never get that cheap credit elsewhere on an ongoing basis.
    Originally posted by Turtle
    Ours is with C&G and is 1/2% above base, we even moved and increased it (as that was within the original terms) at the same rate!

    Making the banks work for you
    • lisyloo
    • By lisyloo 10th Feb 18, 10:57 AM
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    lisyloo
    • #8
    • 10th Feb 18, 10:57 AM
    • #8
    • 10th Feb 18, 10:57 AM
    In this instance I would keep it, as it gives you easy access to money if you need it.
    Originally posted by jackomdj
    The mortgage term ends this year, so I donít value have an option of just keeping it. I would need to extend/re-mortgage.
    Iím asking if the potential costs e.g. survey, legal, mortgage fees are worth the potential benefits.
    • lisyloo
    • By lisyloo 10th Feb 18, 11:01 AM
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    lisyloo
    • #9
    • 10th Feb 18, 11:01 AM
    • #9
    • 10th Feb 18, 11:01 AM
    I wouldn't do is close the account. It's always there then if you need to drawdown on it.
    The mortgageterm ends in 2018, so I have no automatic right to keep it open. By default it will end.
    What I!!!8217;m asking about is the process of extending/remortgaging both in general and also specific experience with first direct.

    For example - would there be legal work to extend the charge (I don!!!8217;t know if charges have an end date in them).
    Would there usually be a survey for a mortgage extension?
    • lisyloo
    • By lisyloo 10th Feb 18, 11:03 AM
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    lisyloo
    Ours is with C&G and is 1/2% above base, we even moved and increased it (as that was within the original terms) at the same rate!

    Making the banks work for you
    Originally posted by jackomdj
    Weíre you extending the term?

    Did you have to pay legal fees, survey, mortgage application fee?

    If all that applies Iím wondering if the costs exceed the benefits?
    • Thrugelmir
    • By Thrugelmir 10th Feb 18, 11:48 AM
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    Thrugelmir
    Pay it off. Being an outright home owner. Gives a potential lender a great deal of comfort. Whereas they have no control over what you do with your savings, therefore discount them fully as having no value.

    The mortgage redemption fee will be paid whenever the mortgage finally ends. This costs the cost of removing the charge from the property at Land Registry etc.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • AnotherJoe
    • By AnotherJoe 10th Feb 18, 12:04 PM
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    AnotherJoe
    If its ending anyway, no it certainly isn't worth the cost and hassle of getting another mortgage when you dont need the money. Close it down when it ends.
    • kingstreet
    • By kingstreet 10th Feb 18, 3:22 PM
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    kingstreet
    In future, if you need one, a remortgage of an unencumbered property can be done free. There are plenty of products with free legals or a cashback and without product, valuation or arrangement fee.

    Keeping open an account which will end in a few months achieves nothing.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • jackomdj
    • By jackomdj 10th Feb 18, 4:13 PM
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    jackomdj
    When you say the term ends I assumed you meant a rate so you would be going onto the SVR rather than the current mortgage was ending.
    • kingstreet
    • By kingstreet 10th Feb 18, 4:28 PM
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    kingstreet
    The mortgage term ends in 2018, so I have no automatic right to keep it open. By default it will end.
    Originally posted by lisyloo
    jacko? Did you get that? ^
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • lisyloo
    • By lisyloo 10th Feb 18, 5:19 PM
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    lisyloo
    Keeping open an account which will end in a few months achieves nothing.
    Originally posted by kingstreet
    Disagree. I!!!8217;ve stoozed and made a profit of between £1k and £8k for a number of years. That!!!8217;s not nothing but my original post refers to keeping it open for longer I.e past the current mortgage term for example another 10 or 20 years (maybe 15 to fit in with state pension age). Apologies for not making that as clear as it should have been.

    Having a charge on a property has several benefits listed in the first post I.e. reducing the chance of fraud, a cheap immediate line of credit. the question was - is it worth it as I don!!!8217;t have a detailed understanding of process and likely costs in this situation.

    For example I don!!!8217;t know whether extending means a new charge or simply not removing it as I don!!!8217;t know whether a charge on the property has an end date. If they are not dated the logically it!!!8217;s actually LESS work to do nothing than to pay to have it removed so an extension would be less legal work that a mortgage ending, but as I said this is the kind of thing I don!!!8217;t know.

    The consensus seems to be it isn!!!8217;t worth it.
    Last edited by lisyloo; 10-02-2018 at 5:26 PM.
    • kingstreet
    • By kingstreet 10th Feb 18, 5:24 PM
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    kingstreet
    Sorry. I thought we were talking about future benefits, not what you'd accrued in the past.

    Seems there's plenty of unanswered questions before any conclusion can be reached...
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • jackomdj
    • By jackomdj 10th Feb 18, 5:59 PM
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    jackomdj
    jacko? Did you get that? ^
    Originally posted by kingstreet
    Yep got that now, but I was just clarifying that my original post referred to the opening statement, "being in the fortunate position to pay off our mortgage" I did not realise that meant the mortgage had run its course.
    • jackomdj
    • By jackomdj 10th Feb 18, 6:04 PM
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    jackomdj
    Weíre you extending the term?

    Did you have to pay legal fees, survey, mortgage application fee?

    If all that applies Iím wondering if the costs exceed the benefits?
    Originally posted by lisyloo
    We paid certain fees, legal, survey as we were moving to a substantially bigger house. We adjusted the term slightly too.

    It was worth it because we are not fully offset and we needed the additional capital and it was such a great rate.
    • Thrugelmir
    • By Thrugelmir 10th Feb 18, 6:20 PM
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    Thrugelmir
    D
    For example I don!!!8217;t know whether extending means a new charge or simply not removing it as I don!!!8217;t know whether a charge on the property has an end date.
    Originally posted by lisyloo
    The mortgage charge has no end date. That remain in place until the debt is repaid. However you've signed a contract agreeing to repay a debt (the loan commonly refered to as a mortgage) by a specified date.

    To extend the repayment of the debt. You'll need to apply for a new mortgage. Which will result in a new product, You won't be able to keep your existing low interest rate mortgage, If that's your hope.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
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