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Original poster

Is it worth keeping our mortgage with a very small amount left on it?

31 replies

Mull · 01/09/2021 12:37

Hi, we have a plan for paying off our mortgage early. We have one year left until the fixed term is up and (luckily, I had no idea when we signed up to it 4 years ago) are allowed to overpay by 20% a year.

Anyway, we will go onto the SVR Sep-22 and then are going to throw everything at it and pay the balance off by Sep-23.

My question is, is it worth keeping the mortgage account open with a tiny amount left in it, in case we need to clawback any of the overpayments? Or apply to increase to mortgage amount for any reason? I can’t think why we would need / want to but is it prudent to do this rather than close the mortgage account down?

Many thanks for any help Smile

OP posts:
RedHelenB · 01/09/2021 17:41

Can't see why?

Esspee · 01/09/2021 17:45

I would be itching to pay it off. The feeling of release alone would be wonderful. Can't see any advantage in not clearing the debt.

Guineapigbridge · 01/09/2021 17:46

I've paid down my mortgage but have used it as a low cost line of credit for big things (like a very long travel adventure a couple of years back). If it's a flexible line of credit and it doesn't cost you much in fees...then that's cheap debt. Debt's not a bad thing if you can leverage it to do what you want. Especially if you're young and can service it.

BeeLady15 · 01/09/2021 20:00

You’re better off putting money in to maxing out your pension than paying a mortgage off early if you’re on a reasonably low rate of interest

Original poster
Mull · 01/09/2021 20:05

Thanks all for the responses

@Esspee I agree, I am itching to get it paid off! The thought of seeing an account closure letter would be amazing!

@BeeLady15 we are paying extra into both mine and DH’s pensions. I know we should be doing even more (and overpaying mortgage less) but I just can’t wait to be mortgage free!

It’s still a couple of years off so I don’t need to decide now. I just didn’t want to miss a trick.

OP posts:
Peeeas · 01/09/2021 21:41

Why go onto the SVR at all? You can get flexible mortgages at a lower rate than standard SVRs that don't have a repayment penalty. May be worth looking at?

Bonheurdupasse · 01/09/2021 21:45

Small thing but does the bank hold your deeds?
If you were mortgage free it would presumably return them
to you and you’d have the hassle of keeping them somewhere safe.

happytoday73 · 01/09/2021 21:47

My friends slowed down payments at very end.. Despite having money to pay off... Something to do with credit rating and I think the house deeds

MrsArchchancellorRidcully · 01/09/2021 21:49

Double check but I think leaving a few pound owing means your mortgage provider stores your deeds free of charge. If you own outright then you'll have to pay a solicitor to store your house deeds.

tootingbeclido · 01/09/2021 21:54

We paid ours off then took a new one out few years later for an extension. ....fees were quite hefty ..I am sure had we kept and extended the mtge it would have been easier and cheaper

bigbaggyeyes · 01/09/2021 22:01

So I've been told, keeping a mortgage helps your credit rating and will help if you need to get another one (upsizing/moving etc) it's harder to get a new mortgage if you don't already have one

But personally I'd love to be mortgage free

Lovetoridemybicycle · 01/09/2021 22:01

We've kept £10 on ours, just in case. I suppose that when savings are built up we could close it

Soontobe60 · 01/09/2021 22:10

@Bonheurdupasse

Small thing but does the bank hold your deeds? If you were mortgage free it would presumably return them to you and you’d have the hassle of keeping them somewhere safe.
Deeds are held at the Land Registry now. We didn’t get ours when we paid off out mortgage.
JamieFrasersBigSwingingKilt · 01/09/2021 22:33

@Peeeas

Why go onto the SVR at all? You can get flexible mortgages at a lower rate than standard SVRs that don't have a repayment penalty. May be worth looking at?
This.
VikingsandDragons · 01/09/2021 23:30

We got no deeds, no 'you have settled your mortgage' type letter when we paid ours off, it was decidedly underwhelming for what felt like something so big!

KeepingOnKeepingUp · 02/09/2021 10:16

I've kept a few thousand pounds on mine. It gives me a very low cost line of credit should I need it, and means if I do want to move in the future and need a mortgage (unlikely, as I'd be expecting to downsize) I would still have access to the current rate. There would be something to be said for being properly mortgage free, but that's just a state of mind - I have assets that are greater than the mortgage debt so could pay it off at any time.

starfishmummy · 02/09/2021 10:34

We paid our mortgage off a few years ago and our Buiding Society put is into some sort of scheme - its free of charge - but means that if we want a loan in future we don't have to start from scratch as a completely new customer

MyDcAreMarvel · 02/09/2021 10:36

Deeds are digital now. For those saying they left money on their mortgage doesn’t it just come off the next month a payment is due?

BarbaraofSeville · 02/09/2021 11:02

@KeepingOnKeepingUp

I've kept a few thousand pounds on mine. It gives me a very low cost line of credit should I need it, and means if I do want to move in the future and need a mortgage (unlikely, as I'd be expecting to downsize) I would still have access to the current rate. There would be something to be said for being properly mortgage free, but that's just a state of mind - I have assets that are greater than the mortgage debt so could pay it off at any time.
This. The old mindset on mortgages is no longer valid.

All deeds are online so no need to keep a token sum so your bank stores your deeds without charge.

There are other ways of keeping your credit rating good, eg using a cashback credit card for your normal spending then paying it off in full by direct debit each month.

Plus interest rates are so low that you can likely beat the interest charged by even low risk investments.

So while it may feel nice to pay off your mortgage, it often doesn't make financial sense to do so.

Original poster
Mull · 02/09/2021 20:24

Thanks all. It is definitely a state of mind about wanting to be mortgage free - I’m a bit obsessed! At the very least I want a letter telling me how legendary I am when it’s paid off Grin.

I will look into the mortgage products for when our fixed term ends. I’d wrongly assumed that most products except SVR would have repayment restrictions / charges. At the same time I’ll check what these products let you do re a minimal balance / clawback.

OP posts:
HerNameIsIncontinentiaButtocks · 02/09/2021 20:30

We didn't even get a letter when we completed ours, so don't expect an Olympic medal ceremony!

To be fair ours was one of those all-in-one accounts which was briefly fashionable, with current and mortgage in one.

Oddbutnotodd · 03/09/2021 08:45

My mortgage was paid off a few years ago and my lender has a scheme that keeps my deeds completely free of charge.

Billybagpuss · 03/09/2021 08:49

We took out a small extra bit for our kitchen last year, I’m throwing everything at the main part of the mortgage to get rid of that but I’ll keep the other one going, we’re paying less than 2% on it, yet earning around 14% on our ISA and it means we don’t have to worry about finding somewhere safe for the deeds.

Theblackdogagain · 03/09/2021 08:53

We've got an offset mortgage with very low interest (less than 1%) so I'm not paying it off as we can offset the loan with losing the money and it will be useful if we have a change in circumstances. I'm also over paying my pension, the plan is to retire at 55.

FinallyHere · 05/09/2021 12:54

We have a very flexible mortgage.

Second relationship for us both, now DH pretty much started again from scratch, I had a decent deposit. We scrabbled to (nearly) pay it off in ten years.

It does provide a potentially very cheap line of credit, if we ever needed it. We are both older now so credit not as cheap and easy as it used to be

Once the mortgage dropped below £50, yes fifty pounds, I switched it to an interest only account and kept it running for the last years just in case. There was a point at which the mortgage provider found it too expensive to process the monthly payment so we paid nothing.

They got taken over so the payment was reinstated: £50 is not a big payment.

The term is up now, and we never actually needed it. It was good to know we had it in reserve just incase. I am pretty risk adverse.

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