Anything to consider before fully repaying mortgage?
Discussion
Hi folks,
My fixed rate ends in a few days and we're fortunate enough to be able to repay the mortgage in full, should we so wish.
However, we will definitely need to borrow against property again in the future, whether for home improvements, or a property move. Little idea of timescales, but at a guess I would say a need for funds again in 2 to 5 years.
Might it be more difficult to get a mortgage in future, if we haven't had a secured loan for a number of years?
Could not having a (perfectly maintained) mortgage negatively affect our credit rating?
We could, of course, keep a small mortgage (say £10k), but unless there are advantages in doing so, this would seem a bit pointless.
Any thoughts or advice?
My fixed rate ends in a few days and we're fortunate enough to be able to repay the mortgage in full, should we so wish.
However, we will definitely need to borrow against property again in the future, whether for home improvements, or a property move. Little idea of timescales, but at a guess I would say a need for funds again in 2 to 5 years.
Might it be more difficult to get a mortgage in future, if we haven't had a secured loan for a number of years?
Could not having a (perfectly maintained) mortgage negatively affect our credit rating?
We could, of course, keep a small mortgage (say £10k), but unless there are advantages in doing so, this would seem a bit pointless.
Any thoughts or advice?
I owe £100 currently on my house, and am paying £12 a month in order to avoid some early redeption fee, which would have cost me an additional £100, when I agreed to reduce the payments in order not to pay it off too early. I have some money saved for a second house, maybe a BTL, maybe a Gite, maybe an auction wreck with potential. If paying off the mortgage effects my ability to take a £100K loan on the current house (Worth £200K), in order to buy a house at auction with cash, then all my retirement plans are screwed.
Heathwood said:
Hi folks,
My fixed rate ends in a few days and we're fortunate enough to be able to repay the mortgage in full, should we so wish.
However, we will definitely need to borrow against property again in the future, whether for home improvements, or a property move. Little idea of timescales, but at a guess I would say a need for funds again in 2 to 5 years.
Might it be more difficult to get a mortgage in future, if we haven't had a secured loan for a number of years?
Could not having a (perfectly maintained) mortgage negatively affect our credit rating?
We could, of course, keep a small mortgage (say £10k), but unless there are advantages in doing so, this would seem a bit pointless.
Any thoughts or advice?
I think you are wise to assume that having some sort of a mortgage is a good thing. Rightly or wrongly financial institutions have a set idea of what "normal" looks like in a person's credit profile. Multiple mortgages or no mortgage can spook them.My fixed rate ends in a few days and we're fortunate enough to be able to repay the mortgage in full, should we so wish.
However, we will definitely need to borrow against property again in the future, whether for home improvements, or a property move. Little idea of timescales, but at a guess I would say a need for funds again in 2 to 5 years.
Might it be more difficult to get a mortgage in future, if we haven't had a secured loan for a number of years?
Could not having a (perfectly maintained) mortgage negatively affect our credit rating?
We could, of course, keep a small mortgage (say £10k), but unless there are advantages in doing so, this would seem a bit pointless.
Any thoughts or advice?
In today's paranoid banking world, I can well imagine a lender seeing that you've had no mortgage, applying for one and assuming that you are in dire financial trouble and trying to raise capital. No reason for this at all, but I can see it happening. Even a modest mortgage payment being made monthly makes you look more like an average homeowner, which is most likely what lenders are looking for.
Interested in how this 'leave £100 owing' lark works as I'll be looking at clearing mine in the not too distant future.
I can only overpay 8% of the debt each year so if I exceed that I'm expecting a fee anyway and if you're paying say £10 a month on a £100 debt isn't it going to be paid off anyway within a year or so?
I'm tempted to just clear it, if only for the fact that its my only 'debt' and I hate owing anyone anything, but I can see the line of thinking to access some cash.
I can only overpay 8% of the debt each year so if I exceed that I'm expecting a fee anyway and if you're paying say £10 a month on a £100 debt isn't it going to be paid off anyway within a year or so?
I'm tempted to just clear it, if only for the fact that its my only 'debt' and I hate owing anyone anything, but I can see the line of thinking to access some cash.
Unless its an offset mortgage you are going to have to apply again anyway and there is every chance that the best deal for you at the time will be with a different lender so having a nominal mortgage with your existing provider is just going to complicate things and not help.
Having paid off my mortgage over 15 years ago I can assure you that the only thing lenders think about it is that you are a good risk.
Having paid off my mortgage over 15 years ago I can assure you that the only thing lenders think about it is that you are a good risk.
raceboy said:
Interested in how this 'leave £100 owing' lark works as I'll be looking at clearing mine in the not too distant future.
I can only overpay 8% of the debt each year so if I exceed that I'm expecting a fee anyway and if you're paying say £10 a month on a £100 debt isn't it going to be paid off anyway within a year or so?
I'm tempted to just clear it, if only for the fact that its my only 'debt' and I hate owing anyone anything, but I can see the line of thinking to access some cash.
Why would you be paying £10pm on a £100 debt?I can only overpay 8% of the debt each year so if I exceed that I'm expecting a fee anyway and if you're paying say £10 a month on a £100 debt isn't it going to be paid off anyway within a year or so?
I'm tempted to just clear it, if only for the fact that its my only 'debt' and I hate owing anyone anything, but I can see the line of thinking to access some cash.
Just make a £5 payment per year.
Siscar said:
Unless its an offset mortgage you are going to have to apply again anyway and there is every chance that the best deal for you at the time will be with a different lender so having a nominal mortgage with your existing provider is just going to complicate things and not help.
Having paid off my mortgage over 15 years ago I can assure you that the only thing lenders think about it is that you are a good risk.
Depends how you reduced it. Normal payments then yes you will have to reapply.Having paid off my mortgage over 15 years ago I can assure you that the only thing lenders think about it is that you are a good risk.
If you made overpayments then you can simply call them up and ask for the overpayments back and you'' have it within 7 days
Well, rather strange chat with the branch manager at my lenders today.
He seemed almost to discourage me from repaying all bar a nominal amount, suggesting that I might want to keep hold of whatever amount I think I might need for home improvements in the future so I could pay for this outright (I'd mentioned £30k in 3 to 5 years time).
He added that, otherwise, if and when I want to borrow again at a later date, I will have to pay for this. When questioned how exactly, he stated the interest on the loan (at an uncertain future rate) and perhaps a small admin fee. Hmm, thanks for that.
So, in all, he seemed to think it might be worth me continuing to borrow £30k I don't need and pay interest on this amount during the time I don't need it, ideally using some sort of fixed rate to protect myself from future interest rate movements, thereby locking me in.
Of course, he made it clear that this wasn't advice, he just wanted me to think carefully
He couldn't help me with any questions specific to my mortgage account, as this is carried out by their call centre. Joy! Got home, phoned the call centre only to be told their systems are down until tomorrow at the earliest. Fecking useless, the lot of them!
He seemed almost to discourage me from repaying all bar a nominal amount, suggesting that I might want to keep hold of whatever amount I think I might need for home improvements in the future so I could pay for this outright (I'd mentioned £30k in 3 to 5 years time).
He added that, otherwise, if and when I want to borrow again at a later date, I will have to pay for this. When questioned how exactly, he stated the interest on the loan (at an uncertain future rate) and perhaps a small admin fee. Hmm, thanks for that.
So, in all, he seemed to think it might be worth me continuing to borrow £30k I don't need and pay interest on this amount during the time I don't need it, ideally using some sort of fixed rate to protect myself from future interest rate movements, thereby locking me in.
Of course, he made it clear that this wasn't advice, he just wanted me to think carefully
He couldn't help me with any questions specific to my mortgage account, as this is carried out by their call centre. Joy! Got home, phoned the call centre only to be told their systems are down until tomorrow at the earliest. Fecking useless, the lot of them!
Just pay it off and if you need to borrow in the future go for the best deal at the time. All of this stuff of retaining a nominal amount is trying to be clever but there is little real benefit. After all it's not likely to be hard for you to borrow against the house in the future when you have no mortgage on it if you need to.
Siscar said:
Just pay it off and if you need to borrow in the future go for the best deal at the time. All of this stuff of retaining a nominal amount is trying to be clever but there is little real benefit. After all it's not likely to be hard for you to borrow against the house in the future when you have no mortgage on it if you need to.
Yeah, starting to come around to this way of thinking. Siscar said:
Just pay it off and if you need to borrow in the future go for the best deal at the time. All of this stuff of retaining a nominal amount is trying to be clever but there is little real benefit. After all it's not likely to be hard for you to borrow against the house in the future when you have no mortgage on it if you need to.
How do you know this? You seem not to have been involved with a mortgage yourself for some time, so you don't seem well positioned to comment. Unless you work as a mortgage broker perhaps. Do you?Perec said:
How do you know this? You seem not to have been involved with a mortgage yourself for some time, so you don't seem well positioned to comment. Unless you work as a mortgage broker perhaps. Do you?
Look, this isn't 30 years ago when you had to have had a long relationship with a lender before they even considered you. Today there are a myriad of people looking to lend, it's what they do, it's their business.
What they are looking for are people who are a good credit risk, if you have little in the way of capital or track record you can struggle but if you have collateral that more than covers the amount you are borrowing it is likely to be much, much easier.
I don't know what the OP's house is worth but it's almost certain to be a lot more than the £30k he's talking about. So long as he has a decent income and barring a few other black flags it really isn't going to be a problem, he'll be their dream customer.
Borrowing becomes a case of picking the lender that suits you, rather than trying to find someone willing to lend. Sure, I haven't had a mortgage myself for years, but I have done things like act as guarantor for loans and in doing so seen the change in attitude of lenders when they realise that the risk profile is minimal on that particular loan.
Borrowing money is easy when you have capital, it's asking people to take a risk on you that is tricky.
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