They ain't making no more money off me no siree.
June 13, 2010 2:02 AM   Subscribe

So next week I'll be paying off our mortgage and I've got a few questions.

Assuming a few operational details go well (transferring funds mostly), sometime next week I'll be paying off my mortgage. What are the next steps?

I'm assuming that after processing our final payment (with 3.99% penalty thank you very much Natwest) we'll receive the title from our lender. Or is this all electronic in the UK these days? If we do receive title I'm assuming this is the type of paper that must go into the safe deposit box, or is it purely symbolic as others have led me to believe.

It seems almost a UK urban legend that best practices indicate you shouldn't really pay off your mortgage, rather pay down the principal to £1 or so, thus forcing the bank to retain the title documents. The argument goes in this manner you avoid the cost of a safe deposit box, but that's not an issue for us as we get them free from our banker.

Also we want to pay the mortgage off once and for all, knowing we have clear title to the flat rather than letting a third party hold a claim over the property (its bad enough this is a leasehold property!). So any idea on what's going to happen when we do pay the mortgage off?

The bank's call centre staff weren't much help, and even suggesting we "raise that query with our Solicitor".

No offense to the legal crowd (I'm seriously considering entering law school myself this autumn) but I'm not paying a Solicitor fifty quid or so to raise this query unless, of course, absolutely necessary.
posted by Mutant to Home & Garden (6 answers total) 2 users marked this as a favorite
Best answer: Much of this is electronic these days, but your lease, which will be held by NatWest is a paper document which you will need if you ever want to sell the place, and which should be kept in a fireproof strongbox.

NatWest's paperwork should consist of the Charge Certificate, mortgage document and your lease, which it holds as security. NatWest will arrange for the relevant form to be submitted to the Land Registry to confirm discharge of the mortgage and it will hand back your lease to you and then you should get (I think from the Land Registry, but it's been a while since I did any conveyancing, so it might be via Nat West) the Land Certificate - which is is a copy of the eletronic register held at the Land Registry showing your title to the property, and with a note of any restrictions that apply to your use of the property (for example, that it's leasehold).
posted by essexjan at 2:30 AM on June 13, 2010 [1 favorite]

Re: the 3.99% penalty charge. Is this because you're paying off before the end of a fixed period or is this charged for paying off before the end of the term (e.g. 25 years)?

Maybe you've done the calculations on this already but it might be cheaper to see what the maximum yearly overpayment you can make (10% pa seems to be fairly common), make that until the end of your fixed period and then pay off the balance without penalty with the 'spare' repayment cash getting interest somewhere.
posted by i_cola at 8:06 AM on June 13, 2010

Response by poster: Appreciate your point i_cola but carrying debt bugs me even in the best of times. Aside from the mortgage we don't have any other debt, so the sooner this is killed off the better, even with a prepayment penalty, which does in fact apply to the fixed period.

We just want to kill it as we're thinking of moving out to the coast (looking, no firm plans at present) and would like to be able to rent this place without any static from the lender (i.e., otherwise we'd have to transition this into a buy to let mortgage and there are multiple strings attached to that).

In any case thanks everyone! We'll be buying the drinks at a future meetup to celebrate !
posted by Mutant at 6:02 AM on June 14, 2010

Response by poster: More info to help anyone else out going forward: Natwest hit us with an £85 "sealing fee", one that we don't believe was clearly detailed on the original loan agreement.

Advise I received indicated to simply pay it now, otherwise the mortgage payoff would be stalled while we discuss. We can reclaim the fee at a later date, taking it to the ombudsman if necessary.

Apparently many banks are either quietly adding these fees or sharply increasing them. Googling showed lots of people getting clipped with sealing fees of over £225, and other "transfer" fees of several hundred pounds are suddenly being added as well ! Apparently since so few folks payoff and most remortgage, generally people are inclined to ignore these fees - either the new lender picks them up or they (imprudently) add these relatively small fees to their large mortgage.

We're still gonna pay the mortgage off by Friday then revisit all fees we've quoted. If not in the original agreement we're reclaiming and would advise anyone else to do the same going forward.
posted by Mutant at 4:15 AM on June 22, 2010 [1 favorite]

Response by poster: Sent the funds over yesterday to my lender. That was the single largest bill I've ever paid and boy howdy were my hands sweaty ('cause I seriously don't like to spend money).

Anyhow, in case anyone else has a similar query going forward, here are the next steps as identified by my lender:
  1. Lender to send Notification to the Land Registry, removing their charge on property
  2. Lender to send a "closure letter" to myself, confirming receipt of funds and the fact the mortgage is closed
  3. The Land Registry will send me a letter from Land Registry removal of the charge
  4. The lender will send a letter confirm issuance of title deeds to myself
  5. In three to four weeks the title deeds will be issued by the lender, and sent via courier
Also it seems like we've overpaid! I suspected as much since on the 21st our monthly mortgage was paid via direct debit, then a day later I sent funds to pay off the remaining balance. So we'll be getting some cash back.

Note this cash back pertains solely to the mortgage and payments made, it has nothing to do with the fees mentioned above. I'm still going to look into those after all the dust has settled (i.e., we've received clear title).
posted by Mutant at 7:14 AM on June 24, 2010


As my grandpa likes to say (jokingly, I hope) to whomever he repays small amounts borrowed, "ya no le debo nada a ningún hijuelagranputa".
posted by papafrita at 11:55 AM on July 5, 2010

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