Close mortgage or leave £1 balance?

[alana39]

DH has been I'll and we have had a payout on critical illness cover.

I was going to repay and close the mortgage account but the adviser I spoke to at Building Soc suggested overpayment to leave £1 balance so if we did want to borrow in future we could increase borrowing against our overpayment.

That sounds like a great idea but wondered if there are any possible downsides ?

A plus point is that they will store the deeds for free for you. If you pay the full balance you'll be responsible for care and storage of the deeds and would have to pay a solicitor to store them securely.

Check how much they will charge for paying off most/fair chunk/all mortgage. If its a set term maybe you can offset the lump sum (for an offset mortgage it will be tax free) then pay off the debt at the end of the term. You will probably have a closure fee if you close the mortgage account completely.

Ask them to give all cases in writing with all the costs and fees.

Speak to an IFA for best advice!

No fees Frontpaw as we have just got to end of 2 year discounted rate. Now back in standard variable so can close for free and redemption amount is exactly what shows as owing on the online statement.

Deeds now held electronically at Land Registry they said so no cost there.

It does sound all very sensible but thought if there were drawbacks someone in MN would know!

Mortgage is the cheapest form of borrowing at the mo. Use some of the money to clear any other debts + make life easier for you right now.

Don't have other debts bar credit card that I pay off each month.

We both work and aren't big spenders so although we don't have huge savings we are definitely paying off the mortgage as the lump sum is not going to earn more interest than we are paying on the house.

I think I will leave a £1 balance in case we do decide to extend in a few years.

Thanks for your advice everyone.

The only down side I can envisage is the insurers getting arsey about you not using all the insurance money to pay off the mortgage? Check the insurance paperwork to see if the money has strings attached, I know it's only £1 but it only takes a jobs worth to allege fraud and you could be stuffed.
Also, it's no harder setting up a new mortgage than adding to an existing one (same hoops etc), and it'd be a nice feeling knowing the house is all yours.

I hadn't thought of that. Actually I had expected the insurers would just pay the mortgage off, but instead the money was paid into our joint account.

Also it was the amount owed at the time we claimed but of course in the time it took them to obtain confirmation from the doctors we had made further monthly payments to mortgage so the amount paid out was always more than we owed by that time.

There will still be a charge registered against your house at the land registry, so if you are ever looking to move, clear it before legal searches etc are done otherwise it would be easy to forget and have a hassle at the time of contracts etc.

Ok thanks for the tip housemum

my ex and i had a joint morgage and insurance policy,he died and i to was expecting insurance to pay morgage of

anyway they sent cheque and i paid the morgage of,also thought of leaving the £1 thing but decided not to

i wasnt charged any final fees and when the deeds came through i gave them to my solicitor to store,i have never in 4 years been charged by my solictor for this

also as somebody said even if you didnt have access to deed its all on computer at the land registry

please please pay your morgage of its an amazing feeling and frees you from the shackles,especially in these times

sorry about the illness though,never nice

Last year I spoke to my financial adviser about paying off our mortgage, he recommended never paying it off entirely (we are mid 50s) in case we ever needed to borrow more money. It would be harder in your later years to obtain a good rate mortgage, if your husband has been ill I would suggest that the lenders might not be keen on that either.
Please go to a financial adviser - I even discovered that my private pension I was still paying into had frozen 3 years prior and that I wasn't earning any interest; in fact losing from their fees!

Sorry your husband has been ill.

When we paid our mortgage off we paid the full amount off. We asked about keeping a small amount (£1) on the account, in case we wanted to have another mortgage in the future but the man said that we would probably have fees to pay if we wanted to borrow more in the future.

I think if we could have kept the account open to borrow more in the future (if we moved for example) I think I would have but there was no benefit to this for us.

In the end, we paid the full amount off and it is quite a nice feeling to not have that feeling of something hanging round your neck. It's just another simplification in life.

We keep the deeds we got sent out in a safe at home and I understand that the Land Registry keep all copies anyway so I don't really worry about that side of things.