Paying off mortgage

[Bazsm]

I’m in a position to pay off my mortgage early, I think I recall hearing it’s better to keep a small amount owing than pay off in full. Is this or was it ever a thing?

[CambsBill]

IIRC it used to be the case that banks would hold the deeds to your property in their safe (or centrally?) and some people took the view that leaving a few quid on the mortgage meant that the deeds were therefore safe from being lost or whatever until they were needed. With most of the paperwork online now that advantage is long gone, but there may be another reason for doing it. Maintaining a credit score maybe?

[pork911]

Avoid publicly available confirmation you are mortgage free?

[Pheo]

Perhaps a bit easier to get a line of credit if you need by extending the mortgage later?

[bmwmike]

Stops someone stealing your house too

[thekingisdead]

If you do decide to pay it off, register with the land registry for a property alert.

Adds a level of protection should someone try and take a mortgage out on your property

(By having a mortgage / charge on your deeds you are somewhat protected from this)

It’s free service

[Mercdriver]

Check with mortgage provider if your house insurance is included. When I paid off mine it terminated my house insurance. Only found out four months later when I realised I had not had a renewal letter.

[fooman]

A couple of reasons you might do this;

There's an early redemption penalty

Offset mortgage you might want to borrow against in future

[LooneyTunes]

Pheo said:

Perhaps a bit easier to get a line of credit if you need by extending the mortgage later?

Mother in law ran into issues when she wanted a contract mobile phone after being mortgage free for a decade+ and not having any credit cards. Lack of current credit history meant that the mobile operator’s computer saw her as a bad risk (in spite of owning a £1m+ house outright).

If you don’t have one already, may be worth getting a credit card (before paying off the mortgage) and using it regularly enough to maintain a good credit history.

[GT3Manthey]

thekingisdead said:

If you do decide to pay it off, register with the land registry for a property alert.

Adds a level of protection should someone try and take a mortgage out on your property

(By having a mortgage / charge on your deeds you are somewhat protected from this)

It’s free service

Interesting tks I never realised this could be a thing although I'd have thought a lender would be wise to such scams ?

[skeeterm5]

If you are effectively overpaying to pay it off then If you leave a small amount you should be able to withdraw the overpayment in the future if you need funds.

Easier than applying for a new mortgage/loan.

[CarlosFandango11]

You could switch to an offset mortgage and keep it fully offset.

So you will pay no interest, maintain your credit record and be able to use the offset mortgage if you need to borrow cash from it in the future.

[DjSki]

I presume you've filled up your pension?

If not and depending on your age, current income level etc you might want to consider that too.

Wish I was in the same position...

[gotoPzero]

Pay it off in full, its done.

Set up alert on LR for your property for the incredibly rare event someone tries to do something dodgy.

Keep a credit card and spend a bit each month on it and pay it off by DD to keep your credit rating. Maybe even collect some airmiles as you go.

Thats what I do.

Its 2024 not 1975.

[Fitz666]

thekingisdead said:

If you do decide to pay it off, register with the land registry for a property alert.

Adds a level of protection should someone try and take a mortgage out on your property

(By having a mortgage / charge on your deeds you are somewhat protected from this)

It’s free service

Unless you are in Scotland, where this is not something they do as there are different checks made in Scotland and no demand for alerts.

[Ziplobb]

I was 55 a couple of weeks ago and we have made some considerable effort to get rid of it when rates started to shift against us (around £230K OS) and now have under £10k left. Its a really good feeling as it was termed to 60 anyway. I can pay the rest off at anytime and am still tricking a bit in every month but the hard work is done. The bank also have a 1st charge still so It can be used to support any borrowing requirement we may have - we dont want to borrow again but if we needed to help a child or raise some capital for business reasons I dont have to pay the bank to take the security again.

[paulrockliffe]

CarlosFandango11 said:

You could switch to an offset mortgage and keep it fully offset.

So you will pay no interest, maintain your credit record and be able to use the offset mortgage if you need to borrow cash from it in the future.

Mine is offset, still owe a good chunk, but have instant access to a big lump of equity if we ever needed it, I think in 3, maybe 4, years time we will be fully offset with 20 years left to run.

The only complication with this approach is that your mortgage payment is based on the none-offset debt, thanks to the post 2008 reforms that decided interest only was always a bad thing. In effect you can't stay fully offset for the full term, your credit limit is slowly reducing over time.

What that means is you pay, for us it'll be about £500, each month, the debt reduces by the £500, so you then have £500 in the offset that's earning no interest and you need to shuffle the money into an interest-bearing account instead.

Not a big deal, but it's something to remember to keep on top of and unnecessarily faffy compared to an interest-only setup where money would simply stop moving automatically.

Still the best thing we've ever done though, maintained the feeling of being a bit poor, because there's never any money in the bank account, while paying the mortgage down quite quickly. When it is fully offset not only will we have no mortgage payment in effect, there'll be nothing to overpay either, so it's a double-hit . Will probably get told to send the money to the kids investment accounts instead though rather than partially retiring, but I can dream.....

[Darlo74]

gotoPzero said:

Pay it off in full, its done.

Set up alert on LR for your property for the incredibly rare event someone tries to do something dodgy.

Keep a credit card and spend a bit each month on it and pay it off by DD to keep your credit rating. Maybe even collect some airmiles as you go.

Thats what I do.

Its 2024 not 1975.

This is what I do...

[NCE 61]

thekingisdead said:

If you do decide to pay it off, register with the land registry for a property alert.

Adds a level of protection should someone try and take a mortgage out on your property

(By having a mortgage / charge on your deeds you are somewhat protected from this)

It’s free service

Thanks for posting that you can’t be to careful these days.

[alscar]

Bazsm said:

I’m in a position to pay off my mortgage early, I think I recall hearing it’s better to keep a small amount owing than pay off in full. Is this or was it ever a thing?

15 years ago now but when we paid off our mortgage we kept a few hundred live as it were for I think 3 years or so to a) maintain a relationship with the Lender and b) have them store our deeds etc - I guess these days neither has much point.
It might be more psychological than anything else but paying it off is a nice feeling.