Any benefit to keeping a mortgage account open?

Nedzer01

I split my mortgage when I first drew it down a couple of years ago - large %age fixed smaller %age variable. I started paying extra off on the variable. Is there any advantage to NOT paying off this smaller mortgage in full and closing the account outright? I realise even were I just to leave a paltry amount in there - well I'd still be paying dome minuscule interest. But could this account left open be potentially useful as sort of of future line of credit? I guess it all depends on which financial institution I'm with of course and what their rules are. Still it might be worth a general random question put up on boards...?

phormium

Offhand I can't see any benefit to just keeping the smaller second mortgage on the same property open for the sake of it. Now if the smaller one had been the original and the other one a top up then you may not have had the option of clearing it and leaving the secondary one but this doesn't seem to be the case.

I can't see how it would be of any use as a future line of credit as any new borrowing would mean a new application and most likely a new loan account, unless of course your lender has some other system that we don't know about.

I actually have left a small amount on my mortgage for a couple of reasons, it's down to less than 5k but with a good few years left, my reasons are firstly it costs me next to nothing as it's an offset mortgage so I pay no interest once I have 5k in a savings account to offset against it (now you could say I am losing interest on that 5k but savings rates are so low it's neither here nor there), I have the payment reduced to the minimum required for the outstanding amount. With that type of mortgage I have the option of drawing down again some of the original amount, I don't need it or anticipate needing it but you never know and finally I don't have the hassle of looking for somewhere safe to keep my deeds, bank will hold onto them for as long as the mortgage is there.

ReddySteady

in this particular case I see no benefit of keeping the account open.

Mrs OBumble

Nedzer01 wrote: »

But could this account left open be potentially useful as sort of of future line of credit? I guess it all depends on which financial institution I'm with of course and what their rules are. Still it might be worth a general random question put up on boards...?

If it was set up ss a revolving credit mortgage, then this wpuld be true.

But i don't believe that type of product is offered by any bank in Ireland.

(I have one overseas, so understand the concept well. Has been incredibly useful for me.)

coylemj

There is one advantage ..... they will hang on to the deeds of your house. If you close all your accounts with them, they will insist on you taking the deeds off their hands, then you have the job of finding a safe place to store them.

If you have a service account (e.g. to receive incoming credit transfers) in the same institution then it might be possible to close the mortgage but leave €10 or so in the other account just so that you remain as a 'customer' in which case they will hang on to your deeds. If the terms and conditions of the original mortgage state that the house can act as security for all loans with that bank, then as long as you remain a customer they will hang on to the deeds to cover any future loans.

Works for me.

phormium

There are two mortgages though on the one property so only one is possibly being closed so you can be sure they will be still holding onto the deeds for a while yet