Can anyone tell me the   pros and cons of paying off your mortgage ?
For example , i believe that if you have no mortgage you have to pay a yearly sum for the bank to hold your deeds .
Thanks .

My solicitor holds mine for free but I don't think they all offer this.  Some banks offer it as a free service with certain accounts too but you will be paying for the account.
The main draw back to no mortgage is if you ever want to borrow again on the property there will be fees to pay and, certainly at them moment, these can be quite considerable.  To avoid that and avoid having to pay for storage of your deeds you can keep a mortgage of, say, a couple of hundred pounds and just pay the interest.  Your lenders should be able to tell  you more.

forgive me for being stuipd but why must anyone hold the deeds of your home if you have no mortgage?

Safekeeping :-) Although with the land registry it is less important than it used to be but you might want to keep other documents with them like guarantees on double glazing, that sort of thing.  You could keep them yourself in a fire proof box of course.

Ive got some mortgage papers on a couple of business properties and they can be v. bulky with all sales from the year dot. We have a safe here so fine, but usually a solicitor will hold them for you, my Dad has his with his will and they do not charge. But banks do charge about £25 a year to hold deeds. If you ever want to see you have to produce all paperwork and that could be boxs of the stuff, all guarrantees ect...
Trouble is when you cant remeber who has what!.
Re credit rating it does not really count your mortgage, i have a much better rating than my OH as I paid for a couple of cars on hp and my OH has company cars ect so I have 98 and he has 87.
Dad's is rubbish and he's loaded but always paid cash!! Mind you now a days mortgages are diffecult to come by and loans are being tightened. I hope to finish our mortgage in about three years and I am looking forward to it as we are retiring and rebuilding the house at the same time, smaller!!!! bring it on. (more garden room and time for more doggies)

It's not the credit rating I was thinking of but the arrangement fees that institutions are currently charging for loans which, together with the fact that you may also have to pay for a survey on the property, can run to a couple of thousand pounds.  You would not be paying this for an additional loan on an existing mortgage.

Sorry Isabel mis read, yes arrangement fees are the killer. Um a £1000 just to hold and pay interest would be pennies a month thats £15 approx a £1K I'll ask my SIL she's a tax accountant. I would clear it myself and then negociate a loan with fees included if I needed one, the bank should lend on a nil mortgage loan against a house?

Are there any tax implications ?

I don't think so as we no longer get tax relief on mortgage interest do we?

Actually you do on your main living accomodation. EG if you buy another proprty and make a declaration that this is to be your main dwelling, then remove that declaration you then can sell within 3 yaers and not pay capital gains tax.
There are lots of wheezs like that.

But you won't be paying CGT if you only have that one property and I don't think these things depend on having a mortgage or not do they?

Yes you get a cheaper mortgage if its your main residence, therefore if you declare a second place as your main residence youy shift out of the tax payment. I think there is a tax element but i would not bet my life on it.
I am not sure that attaching a loan onto your property is cheaper when you already have a mortgage???
Id love to have the choice of paying all or most of it off now and not later though.

> I am not sure that attaching a loan onto your property is cheaper when you already have a mortgage???

A second loan on a mortgage is usually offered at a very good rate as it is so well secured.

> Id love to have the choice of paying all or most of it off now and not later though.

Certainly the feel good factor of owning nothing to nobody is well worth considering no matter how the figures stack up :-)

I'm a Financial Advisor, so hopefully will know what i'm talking about - some clients may suggest otehrwise though!!

CGT - no CGT to pay on the sale of your main residance, potentially only payable on the sale/disposal of other or investment properties.

There is not really cheaper way of borrowing than through a mortgage, (although at the moment lenders are not offering great rates or deals) therefore taking a personal or secured loan out on a property may not be wise.

Lenders at the moment won't be too keen to be the second charge (2nd mortgage) in the current climate. Secured lenders, the ones that are always on TV, may seem attractive as they will still lend.

With regards to paying off a mortgage, the obvious benefit is that you will be free of a large monthly commitment, so you will be able to spend, waste or invest this money as you desire.

Deeds are valuable, so therefore may be option to keep them somewhere very safe!

Isn't the obvious benefit the fact that you are not paying any interest on a loan?  The advantage of a mortgage is generally that you are paying a lower rate of interest than on other loans but you are still paying it.  The quicker you pay of your mortgage the less interest you will have to pay making the overall cost of borrowing lower

Couldn't agree more with what Bex is saying & I'm a mortgage advisor!!  Obviously if you have the funds & don't require any further borrowing in the near future then yes pay the mortgage off! or at least offset the savings you have against the interest payable on your mortgage!  I would only advise not paying it all off if you may need to release some funds in the near future as many of you have said this is by far the cheapest way to borrow! OR there are penalties payable if you fully redeem your mortgage, however this should only apply if you are on a special deal e.g fixed for 3 years etc, if in doubt check with your mortgage provider.

It is now pretty standard that people are responsible for the safe keeping of their deeds, not may lenders will hold them & solicitors etc tend to charge an annual fee!

This post has got me thinking, we got our house nearly five years ago now, we have a mortgage, our solicitor sent through our deeds to our house a few months later with a letter saying the company we have our mortgage with will not hold them, they are sat in a draw should they be kept with a solicitor?

A mortgage is a 'loan'.  It is always cheaper to use your own money rather than someone else's. If you think about it, there are a lot of people making mega bucks out of providing mortgages and that says it all.  Also, if you pay off your mortgage, you have freedom to do what you like with your money, as someone else said............spend it, waste it or invest it! :)

> we have a mortgage, our solicitor sent through our deeds to our house a few months later with a letter saying the company we have our mortgage with will not hold them, they are sat in a draw should they be kept with a solicitor?

I'm suprised the mortgage company doesn't have them. I thought they usually kept them until the mortgage is paid.

A couple of years ago we were sent our deeds, although our mortgage still has two years to run. The covering letter said that, because everything's now computerised, the actual paper deeds aren't required any more!

We were told that too JG.

> A couple of years ago we were sent our deeds, although our mortgage still has two years to run. The covering letter said that, because everything's now computerised, the actual paper deeds aren't required any more!

Thanks JG. I suppose the old paper system does seem quite old fashioned.