Why never pay off the Mortgage

#1
Just speaking to a Matlo mate about houses and he mentioned that you should never pay off your mortgage. So his old man still pays out 5 quid a month for his.

I was wondering why? Anybody know.
 
#2
I thought it was something to do with letting the bank keep hold of the deeds in their uber-safe storage, rather than paying it off and having to store the thing yourself. I'm told its a piece of paper you really don't want to lose.
 
#3
I thought it was something to do with letting the bank keep hold of the deeds in their uber-safe storage, rather than paying it off and having to store the thing yourself. I'm told its a piece of paper you really don't want to lose.
Although it is wise to hold onto the deeds or to at least secure them, if the land is registered in your name it doesn't matter as there is a record of who owns what on the Land Register. If the land is unregistered however, any potential purchaser may have a headache trying to establish true ownership, and you may very well have difficulty in selling the property, as they may not wish to take the risk if you cannot produce the deeds or any other evidence of ownership.

Personally, I can't wait to pay off my mortgage.
 
#4
My mother does the same thing, got £25 left to pay, and only pays the yearly interest on it, she say's because of this its so if in an emergency she can still re-mortgage the house, if it was paid of you wouldnt be able to.
 
#5
Whilst you have a mortgage the mortgage provider holds your deeds.
However as the Land Registry hold the deeds electronically now adays
there is no real requirement for the paper copies
 
#6
I paid my last three mortgages off as soon as I could - why be in debt if you don't have to be? I now have more disposible each month and, more importantly, if the sh1t hits the fan, no one can foreclose on me and take my house.
 
#7
Just speaking to a Matlo mate about houses and he mentioned that you should never pay off your mortgage. So his old man still pays out 5 quid a month for his.

I was wondering why? Anybody know.
The reason that I was told is because it is very easy to get a loan should you wish to. Aparently it is better to borrow money on a mortgage than an ordinary bank loan. Lower interest % I think.
 
#8
An accountant told me that he never paid off his mortgage. He said that anyone wanting to sue him would quickly see that he owed money, and might conclude that it was not worth their while pursuing him any further. A bit convoluted, but it makes sense.
 
#9
The reason that I was told is because it is very easy to get a loan should you wish to. Aparently it is better to borrow money on a mortgage than an ordinary bank loan. Lower interest % I think.
Hasn't that changed? Neither of my mortgage companies do such a thing as a "mortgage extension" - they instead offer another loan that differs little from a standard bank scam.
 
#11
It used to be a good idea, when there was some tax relief, but that doesn't apply anymore.

Your credit rating can also sink like a stone without a mortgage, basically it's very difficult for the banks to get their money back from someone who is first charge on a property if a loan is secured on it. For some reason the banks don't like it when they are not holding all the cards!
 
#12
here in sunny aus ,the only account the government , cannot take money out of is the mortgage account, if the govt here overpays you in in anyway,eg.pension or benefit if you have funds in a bank account, without informing you till the dirty deed has been done the govt can withdraw any funds from that account that they deem you owe them, so always keep your mortgage open even use it as a cashback savings facility , never pay it off
 
#13
It used to be a good idea, when there was some tax relief, but that doesn't apply anymore.

Your credit rating can also sink like a stone without a mortgage, basically it's very difficult for the banks to get their money back from someone who is first charge on a property if a loan is secured on it. For some reason the banks don't like it when they are not holding all the cards!
Maintaining a high credit rating was the reason I understood it was necessary to maintain a small mortgage.
 
#14
If I am right, property transactions after 1990 have been electronically recorded at the Land Registry. If you have a mortgage taken out before then, the paper deeds held by the bank/bldg soc are your proof of ownership. Hence the reason for not paying off the mortgage in order that they take responsibility for storage.

Once the transaction is recorded at the Land Registry, you can forget the documents. But I wouldn't because they are still a history of who has owned your house, and may be of interest to those who buy your house when you croak.

Litotes
 
#15
One thought-as I have been securing a good deal on my mortgage this evening (and will allow my current lender to match it tomorrow or I'mm offski). The new mortgatge I am going for allows me unlimited over payment, but has penalty fees for ending it before the fixed term. I will be leaving the mob in 4 years-just before the fixed term ends, so rather than pay off the loan and get hit for a grand in penalties I can just leave £25 quid unpaid-as long as interest is calculated daily (it is) then there is no problem.
 
#16
One thought-as I have been securing a good deal on my mortgage this evening (and will allow my current lender to match it tomorrow or I'mm offski). The new mortgatge I am going for allows me unlimited over payment, but has penalty fees for ending it before the fixed term. I will be leaving the mob in 4 years-just before the fixed term ends, so rather than pay off the loan and get hit for a grand in penalties I can just leave £25 quid unpaid-as long as interest is calculated daily (it is) then there is no problem.
Sounds good to me; what rate are you paying?

Litotes
 
#17
My parents keep their deeds at the bank for a small annual interest payment as, whilst others have quite correctly stated, the land registry hold your records, it is also a right roayal pain in the ass to get copies made as you need proof (as in your deeds) of ownership. Also due to recent a family bereavement, it was easier for the solicitor to get the deeds from the bank than it would have been to have them recreated with a legally dead owner from the land registry.
As the saying goes. It's better to be safe than sorry.

Oh, and the land registry versions do not include any 'historical' additions to your deeds, such as redrawn boundries etc.
 
#18
Agree with the gents who mentioned electronic registration at the registry. All our land registry docs going back to when the house was first built was sent to us some years ago, curlycue writing on some stuff.
 
#19
My mother does the same thing, got £25 left to pay, and only pays the yearly interest on it, she say's because of this its so if in an emergency she can still re-mortgage the house, if it was paid of you wouldnt be able to.
She may remortgage the house just as easily once the mortgage is redeemed as she can before the date of redemption.
 
#20
I paid my last three mortgages off as soon as I could - why be in debt if you don't have to be? I now have more disposible each month and, more importantly, if the sh1t hits the fan, no one can foreclose on me and take my house.
It rather depends on what you mean by the 'sh1it hitting the fan'. If, for example, you accrue personal debt on your credit card or have other unsecured debts which have become the subject of a County Court Judgement, the creditor may apply for a Charging Order under section 1 Charging Order Act 1979 to turn an unsecured debt into a secured debt and apply to the court for an order to have the property sold with the liability being met from the proceeds of sale. Similarly, if you bring or defend an action at law, the equity of redemption is the capital out of which the other side's costs are found if you lose. If you obtain legal aid, then an interest-bearing charge is placed on your property in respect of any property 'recovered or preserved' which may result in a court order for sale should the legal aid contribution not be paid with interest. If your local authority is required to remove contaminated waste, the cost is recovered by an interest-bearing charge on your property. If you require or deemed to be in need of nursing care in your dotage, the cost of it is met by an enforced sale to release the equity of redemption to pay for it. If you attempt to leave you property to your relatives by way of avoidance, the court may deem it a 'sham' transaction and obtain the equity in any event. If you are declared bankrupt, the equity of redemption in your home is the means by which your creditors may obtain their money. There are a myriad of perfectly legal ways in which you and your family may lose your home, of which the above are but a few examples. The equity of redemption in your home under a redeemed mortgage is little more than a 'piggy bank' for the financial services industry and the state.

Incidentally, the person with a more secure form of tenure in property is the much maligned little man in his Council House who, as a 'man of straw' is not worth suing because he has no equity tied up in property to make it worthwhile proceeding against. He has no interest in property to be involuntarily charged as a consequence of indebtedness, he has no mortgage, the terms of which may be unilaterally altered at will by his lender to the point where he is deliberately allowed to fall into mortgage arears to underwrite the business liabilities of his lender, yet he has ready access to credit. He may cheerfully apply for voluntary bankruptcy and retain his home while at the same time receive free nursing care in the same nursing home as the man who has had his house sold under him since he has no property which may be the subject of a compulsory state-enforced sale.
 

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