Why never pay off the Mortgage

Discussion in 'Finance, Property, Law' started by old_bloke, Nov 18, 2010.

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  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. 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. 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. 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.
  10. Thankss for all the good advice , pity I paid of the first one but will not the second.
  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. 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.

  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.