Viewing 40 posts - 1 through 40 (of 68 total)
  • Paying off the Mortgage early.
  • granny_ring
    Full Member

    We’re in the fortunate position to be able to finish the mortgage in a couple of months.

    Some mates have said yep, pay it off and some have said leave a £1 or so in the account to keep it open so if you need to borrow money it’s there.

    Any thoughts?
    How do you go about only leaving a £1 in the account without going into default with payments?
    TIA

    scotroutes
    Full Member

    I left a nominal amount in a mortgage I was paying off. That was when there was a charge to have your title deeds held securely by a solicitor. It was cheaper to leave a small mortgage and let the bank hold onto them. The bank simply recalculated my payments according to the new amount.

    Check there are no early repayment penalties.

    Also check to see if you can invest the money for a better rate than your mortgage (might be unlikely at the moment).

    genesiscore502011
    Free Member

    No need anymore as pretty much all lenders offer fee free re-mortgages now including mortgage free capital raising. This was not the case 10 years ago and keeping a very small balance kept the mortgage deed open to raise funds in future with less or no mortgage set up fees (valuation solicitors etc). Plus it used to mean the deeds would be kept with lender in a vault safe usually free or again small fee. Now all deeds are an image scan at Land Registry so no hard copy needed.

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    sideshowdave
    Free Member

    Also depends on how old your house is, when I paid my first house off the solicitor’s kept the deeds in their care as we paid for a will with them. When I bought my 2nd house it was a newer build and didn’t come with any deeds so no need to hold them anywhere.

    granny_ring
    Full Member

    The BS gave us the deeds a few years ago so that side of things isn’t an issue, although I do need to sort out where to keep those stored safely…. 🙂

    sideshowdave
    Free Member

    Well I never kept the mortgage going, I just wanted to get rid of it and not be tied to any debt. So I never saw any use of keeping a £1 mortgage and it’s been 15 years now and it’s never affected anything else.

    longj
    Free Member

    As long as the property is registered you don’t need to be too worried about where to keep the deeds because most of the key docs should be with land registry electronically. Handy to keep hold of in the very rare occasion there’s some sort of conveyancing issue.

    Gary_M
    Free Member

    Also check to see if you can invest the money for a better rate than your mortgage (might be unlikely at the moment).

    We’re in the same position as the op and I can’t find a 100% secure way to make more money per month than the mortgage costs. If we have 4 santander 123 accounts we just about break even on £80k so I’d rather get the whole mortgage paid rather than keep £80k in the bank.

    scotroutes
    Full Member

    Yep. Interest rates for folk who actually want to save some money for their future are shockingly low. Still, it encourages folk to spend and that’s got to be good for “the economy”, right?

    Sundayjumper
    Full Member

    I’m planning on being in the same position as granny & Gary in 1-2 years time. Currently putting all spare cash into the mortgage as it definitely seems the best, safest place for it over a short-ish period of time.

    MoreCashThanDash
    Full Member

    Paid ours off last year – amazing feeling of relief, especially now I seem to be **** up the rest of my life, but at least we have a roof over our heads.

    That said, the roof, and various other aspects could really do with a few improvements/repairs etc, so maybe we should have extended the mortgage while rates were low and we could afford it to get these bits and pieces done.

    (It was a low monthly payement/tiny mortgage anyway, so the actual amount we had extra doesn’t look great compared to the cost of new kitchen etc….)

    mitsumonkey
    Free Member

    Paid off our mortgage last year, didn’t even occur to us to keep a small one going, just didn’t want to pay one more day of interest. As moredashthancash has said it was an amazing feeling of relief, like a massive weight had been lifted from our shoulders.

    fooman
    Full Member

    The only reasons it would be worth keeping open (with a nominal amount) is if 1. there was an early redemption charge 2. you think you will need to borrow a large chunk of cash in the near future.

    mudshark
    Free Member

    I have a flexible offset tracker mortgage and choose to keep it as might want to access a chunk of cash at some point and no need not to keep it – the fact I have this debt doesn’t bother me at all.

    nickjb
    Free Member

    Could potentially pay ours off but we’ve decided to invest the money elsewhere as the returns are far greater and it’ll hopefully allow us a bit of flexibility later. If we are talking a few hundred then I’d just clear it. Be nice to have it out the way.

    Sundayjumper
    Full Member

    Details please, of where returns are far greater, after tax, with no risk.

    gonefishin
    Free Member

    Details please, of where returns are far greater, after tax, with no risk.[/i]

    He didn’t say no risk though did he. Over a significant time period it is likely that the return in the stock market will outperform a current mortgage.

    nickjb
    Free Member

    Details please, of where returns are far greater, after tax, with no risk.

    You’ll need a little risk to get a better return. That’s kind of how it works. Our BTLs are returning around 8% not including growth so should be well over 10% after tax all in. Shares in an ISA do OK too. Cash ISA is a little under the mortgage rate but handy to have some in the ISA wrapper in case rates go up. Not risk free and there will be some tax to pay but overall we are happy with the choices as long term I think it’ll offer the best return. Still paying the mortgage off too, just that’s not the only thing.

    Matt24k
    Free Member

    My mortgage has 12 years left on it and my monthly repayment is 98 pence. That’s right, for less than a quid a month I have instant access to £72,000 at base rate plus .75%. I also don’t have to pay a £300 redemption fee and they look after the deeds.

    rocketman
    Free Member

    Paid ours off years ago

    Got some paperwork the deeds from the BS never heard from them since.

    Gary_M
    Free Member

    Our BTLs are returning around 8% not including growth so should be well over 10% after tax all in

    Including capital gains tax when you sell?

    I don’t want the cash tied up long term so for me paying the full amount off is the best option.

    nickjb
    Free Member

    Including capital gains tax when you sell?

    Depends on house prices, hence the risk element, but I think so. It’ll still be way better than mortgage rate.

    I don’t want the cash tied up long term so for me paying the full amount off is the best option.

    Funny. That’s the reason I’d rather buy property than pay off the mortgage.

    mudshark
    Free Member

    FTSE’s dropped so much, may well start using my mortgage to put more money in but not sure on timing yet.

    Gary_M
    Free Member

    I’d rather buy property than pay off the mortgage.

    I already have a couple of rental properties so it’s not an option I’d look at.

    footflaps
    Full Member

    I just paid mine off asap and am now paying into SIPPs and ISAs instead.

    Sundayjumper
    Full Member

    He said “returns are far greater”. That’s a pretty definite statement, as opposed to a more accurate “returns could be far greater” 😉

    I have BTLs too, 8% sounds about right, but I pay a marginal tax rate of 45% on the income and with the risk of sudden maintenance bills knocking a % or two off that return in any year it’s debatable whether it’s “far” better than the 2.5% mortgage I’m currently paying on my own house. There’s a bit of capital appreciation, sure, but legal fees & capital gains will take a decent chunk of that when you sell. And until you sell it’s just a paper profit anyway. There’s your risk.

    Anyway, my point is that unless there’s zero risk then saying you can get much better returns somewhere else is a case of apples and oranges. Why pay off the mortgage ? You can get far better returns by going down the casino and putting it all on red ! :p

    nickjb
    Free Member

    He said “returns are far greater”. That’s a pretty definite statement

    Are, as in they are right now. It could go down, it could be awful long term but far more likely to go up looking at historic trends. Even with your doom and gloom scenario BTL still just beats the mortgage rate and if things go well its well over. Yes its a gamble that’s why its part of a spread of options (including paying off some mortgage, although none goes to the casino). Not saying its the right option for everyone, just something to consider.

    Its actually interesting to me to hear dissenting voices as I’ve no idea really if I’m doing the right thing so its good have a few opinions and options to mull over.

    breadcrumb
    Full Member

    We (the missus) cleared ours a few years ago. Our solicitor kept hold of the deeds for a fee (£10?).

    We have since moved and paying off the mortgage is not not likely to happen for a long, long time

    footflaps
    Full Member

    Our solicitor kept hold of the deeds for a fee (£10?)

    You don’t need to worry about deeds anymore, they no longer count for anything. Ownership is determined by the central record, not who owns the deeds.

    Flaperon
    Full Member

    Yep. Interest rates for folk who actually want to save some money for their future are shockingly low. Still, it encourages folk to spend and that’s got to be good for “the economy”, right?

    Government doesn’t want people to save for the future because that’s someone else’s problem. Lifetime Allowance etc which the average worker saving into a pension from 21 can hit.

    granny_ring
    Full Member

    Some good points cheers.

    @Matt
    , how did you manage to arrange that low amount each month?
    Funnily enough I don’t feel a sense of huge relief that we could finish the mortgage soon,seems a strange situation to be in as we’re just used to the same amount coming out of the bank each month.

    We do need to spend some money on the house, new kitchen and maybe boiler sooner rather than later hence the thought of keeping the mortgage ticking over as Matt has done so we have easy access to more money if the reserve fund dries up.

    piedidiformaggio
    Free Member

    Reckon our mortgage should be done somewhere between June and October this year depending on how carried away we get on decorating, etc. around the house in the next few months.

    I’m going to go for just getting shot of the whole thing, I already feel a sense of relief being close to paying it off. Once it’s actually done, I’ll be grinning from ear to ear, especially as it will be 23 years ahead of what apparently is the average age Britons become dept free.

    konabunny
    Free Member

    This page is for the 1%, I see

    footflaps
    Full Member

    This page is for the 1%, I see

    The 1% bought a £m house with cash…

    The rest of us were just born when houses were a lot cheaper…..

    zanelad
    Free Member

    We (I) paid ours off a couple of years ago. ’tis a great feeling even now.

    The Halifax sent us the deeds. As has been mentioned they’re not really important any more. They were useful when a neighbour was telling us the the rather ropey fence was our responsibilty. I knew it wasn’t but he insisted on arguing. I said “hold on a mo”, popped into the house and came back out with the deeds, which clearly showed it was his fence.

    The look on his face was priceless. Good to his word, he put up a new fence.

    trail_rat
    Free Member

    “I’ll be grinning from ear to ear, especially as it will be 23 years ahead of what apparently is the average age Britons become dept free.”

    is that the same as the average age britons die ?

    piedidiformaggio
    Free Member

    Probably. I’m not planning on dropping dead this year either!

    toby1
    Full Member

    It’s ok to hate most of the people on this thread right?

    piedidiformaggio
    Free Member

    That’s fine, if it makes you feel better.

    Sundayjumper
    Full Member

    I hate most of them too, fwiw.

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