If you're in the position to pay it off, is it a good idea to leave a small amount outstanding on your mortgage? Doing so can apparently be of benefit to avoid start-up charges if you ever want to move house, maintain your credit rating, safely store title deeds, etc. I would guess that the first of these is probably most valid, but is it really worth doing?
In message , Halmyre writes
No. It would only be of use if you wanted to borrow money from the same lender on the same house. It wont help when borrowing more dosh on the security of another house, in fact it will slow things up slightly.
No.
Only for properties that are still 'unregistered land'. @registered Land' is now paperless.
Sadly, it is the most inaccurate.
Not these days IMO unless the land is unregistered.
Thanks.
It's just a thought, and possibly a silly one, but there's another potential reason to keep a trivial amount owing, which may or may not be important to you.
These days it's easy for anyone to see whether there is a charge on your property (which there will be if you have an outstanding mortgage or secured loan).
If there is no charge, then people can, with reasonable confidence, make some inferences about your personal balance sheet, i.e. that you don't have much debt (because any debt you have is probably unsecured) despite the fact that you have a valuable asset.
But if there is a charge showing, then they are none the wiser as to whether you owe hundreds of thousands of pounds or just a few pence. Obfuscation protects your financial privacy.
As I said, it's just a thought. Probably flawed in some way.
Why would anyone actually want people to think they are in debt when they are not?
That's not really what I suggested. The presence of the charge is not evidence of significant debt, as the OP's dilemma demonstrates. The absence of a charge, however, does allow certain inferences to be made.
My point is that your property and its value cannot be easily kept private, so you might as well keep the things on the other side of your balance sheet hidden from public view, since it costs nothing to do so.
I'll turn the question round if I may: Why would anyone actually want people to think that they are rich, even if they happened to be so? I imagine it would attract all sorts of undesirable attention, not to mention junk mail. What's to be gained?
This is a good point. I don't go around telling strangers what my net financial worth is, but the Land Registry website allows people to determine this quite accurately if I don't have a mortgage. A few years ago, when I was buying my current house, I wanted to find out a bit about my prospective new neighbours before committing myself. The Land Registry website allowed me to find out what charges there were against their properties which told me something about them. As an aside, you can infer information from what kind of organisation holds the charge, eg. prime lender, a subprime lender, a shared-equity organisation, and whether the charges have changed recently.
Personally, I'd rather people though I was rich[1] in that I owned my home than to think I had a debt on it as I am not convinced that the act of having paid off your mortgage would open you to attention as those with debt are more likely to be prepared to take on more debt than those who are debt free.
Is this speculation or do you actually have experience of this undesirable attention?
[1] I do not agree that owning own's home = rich.
Once again, the question is not "Given the choice, do you want people to think that you are rich, or to think that you are poor?".
The question is "Do you want people to know whether you are rich or poor?"
If the answer to the latter is 'no', then leaving the charge on your property is a virtually cost-free way of helping ensure that it is so, because whilst the charge is a matter of public record, the amount of debt is not -- it could be anything from £1 upward.
I don't doubt for a moment for it will be less of an issue for some than for others, and the former may greatly outnumber the latter!
It is speculation.
Well, it's always going to be a relative thing isn't it? If you were evidently a twentysomething, and if I could see that you owned your 750k property, with no loans secured on it, and if I was aged 40 and had just bought the 300k home a few doors down with a crippling £290k mortgage, I might reasonably think you were enviably rich (in assets, if not necessarily in income).
In message , Clifford Frisby writes
A credit register search will probably show the amount owed (if it is owed to a lender who discloses info to the register).
That's not the proposition. Is is rather that owning one's home free of debt makes you rich in the sense that it makes you better off than someone else with the same income as you, because you don't need to commit a fraction of your income to mortgage payments.
It means you have more *disposable* income. Alternatively, if you compare yourself to someone with the same disposable income as you, it means you have an easier life, by having a smaller actual income requirement.
It all depends on what you mean by "rich", of course, but the two principal ways of measuring richness are (1) in terms of your net worth (assets minus liabilities), and (2) your ability to spend. Either way, owning a home debt-free makes you richer than owning it with a debt, and also than not owning one.
I left a small amount on my mortgage for the following reasons:
1) It gives me easy and relatively cheap access to a large loan should I need it at some time in the future.2) Since my mortgage is with a building society, there is a small possibility of a windfall at some time in the future.
I don't know if either of these points would be relevant to your situation.
Our mortgage is with Northern Rock - I think a windfall is out of the question!
Do you mean a credit register such as one maintained by a credit reference agency?
I am not aware of any public entitlement to inspect these. The consent of the subject is required, isn't it?
One Building society, NW, will offer cheaper (0.5% less) personal loans.
Additionally, there may be better rates for Contents or House insurance. Ask before you pay off.
Flop
Not so as available cash is a function of outgoings *and* incomings.
An unemployed person living on £50 a week who happens to have paid off their mortgage is a hell of a lot poorer than a couple of teachers paying the mortgage of a semi in the midlands. Also, people who have older mortgages, taken out when houses where cheaper, are going to be "richer" than someone on a similar income, living in a similar house.
It's all just speculation and in reality there is no way of knowing who is "rich" on the back of whether or not they have a loan against their house.
You are still assuming that not having a mortgage makes you rich but judging that someone who does not have a mortgage is rich is no more accurate a measure than judging that someone who does have a mortgage is poor.
I know plenty with mortgages and none of them are poor and some of them are pretty "rich" having bought in cheaper times and having two incomes. As it happens, I don't know anyone with a mortgage who is "poor" but most of my circle are 40+ and I am thinking that this more of a category for younger people who have bloated mortgages due to recent house prices.
I also know some people who are mortgage free. Yes, some are quite "rich" but I also know some who live on low incomes and are therefore "poor".
In message , Clifford Frisby writes
Yes.
In message , Halmyre writes
err, probably because it isnt a building society!
Okay, so 'rich' and 'poor' are subjective and relative, but I note that I didn't use those words them in my original contribution! I agree that you can be asset-rich and income-poor, or vice versa.
I am only talking about the balance-sheet or 'net worth' perspective, not about the diplosable income or 'cashflow' perspective. I only used the term 'rich' later on as a shorthand term when I assumed that its meaning would be implicitly qualified by that balance-sheet context.
Avoiding the terms 'rich' and 'poor' again, I still say that if someone owns a property of significant value (several times the Consumer Credit Act ceiling, say) and which is unencumbered by a charge, then that someone almost certainly has a similarly significant net worth.
If there is a charge, OTOH, then the situation is opaque.
Nothing more or less than that.
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