Hello, I wonder if anyone can advise on what the best thing to do is in the
following situation. I am about to come to the end of my fixed rate mortgage
term and intend to chip off the last £10k from savings. I understand it is
advisable for a number of reasons to leave a few pound left on the account.
The reasons for this I have been led to believe are for potential future
raising of funds through the same mortgage company without paying extra
fees; so that the mortgage provider can retain and thus protect the security
of my deeds, essentially free of charge and should any windfalls occur with
my provider (not in this case though), mortgage holders may benefit. In
light of these points, how much money is it advisable to leave owing on the
account? 50p, £1, £100?

I also have two life insurance policies with Legal and General which cover
critical illness and life cover (decreasing term). As the mortgage will be
paid off early, do these types of policies "in general" still cover the
amount the mortgage would have been worth or what is actually left? I asked
L&G by phone, but was rather unconvinced of their support assistant's abrupt
answer...They said the decreasing term life cover would continue to cover
the amount the mortgage would be worth had we not paid it off early, but I
can't see it being that easy should you need to claim. Call me skeptical!

wrote in message
...
Hello, I wonder if anyone can advise on what the best thing to do is in
the
following situation. I am about to come to the end of my fixed rate
mortgage
term and intend to chip off the last £10k from savings. I understand it is
advisable for a number of reasons to leave a few pound left on the
account.
The reasons for this I have been led to believe are for potential future
raising of funds through the same mortgage company without paying extra
fees; so that the mortgage provider can retain and thus protect the
security
of my deeds, essentially free of charge and should any windfalls occur
with
my provider (not in this case though), mortgage holders may benefit. In
light of these points, how much money is it advisable to leave owing on
the
account? 50p, £1, £100?

Firstly, lenders vary in the amount of minimum balamce they will accept. In
my case it was £2K (Bank of Ireland). You'll have to ask them.
Secondly, you probably don't need any deeds these days because the land will
almost certainly be registered.
Thirdly, if you did want to keep the deeds, a bank would store them for you
for about 75p a month.
Fourthly, if you are likely to want to raise extra funds, then yes, keeping
the account open may be useful. However, that presupposes that you won't get
a better deal elsewhere, even with fees.


I also have two life insurance policies with Legal and General which cover
critical illness and life cover (decreasing term). As the mortgage will
be
paid off early, do these types of policies "in general" still cover the
amount the mortgage would have been worth or what is actually left? I
asked
L&G by phone, but was rather unconvinced of their support assistant's
abrupt
answer...They said the decreasing term life cover would continue to cover
the amount the mortgage would be worth had we not paid it off early, but I
can't see it being that easy should you need to claim. Call me skeptical!



The payout will be what your mortgage would have been had you kept it. I'm
not sure what you mean by 'that easy'. The payout will be made according to
a formula and may have been slightly more or slightly less than your
mortgage if you still had it.

Rob Graham

robgraham wrote:

Secondly, you probably don't need any deeds these days because the land
will almost certainly be registered.

But he needs to be sure it is. Land doesn't just become registered by
itself, but will usually make it onto the register the first time it
is sold since registration became the norm. Any properties which have
not changed hands for ages will therefore probably not be registered.

Fourthly, if you are likely to want to raise extra funds, then yes,
keeping the account open may be useful.

Yes, "may" being the operative word. With some ("flexible") types of
account the right to re-borrow principal already paid off is automatic.
With some, I dare say getting approval for an additional advance can
be as involved as getting approved for a whole new loan from scratch.

Thank you very much to both of you for your replies. Much appreciated. I
will have to discuss further with my mortgage provider about the lowest
possible minimum balance.

My original mortgage term when I took the life cover was 25 years. I reduced
the mortgage term to 5 years, 3 years ago after having had the mortgage for
2 years. I've effectively cut the mortgage term from 25 years down to 5 and
so the small print of any payouts is quite important, hence my slightly
paranoid skepticism.