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If I clear my mortgage, does it put me in a better position to re-finance in the future


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hello all, 

I am unsure of what the future holds so wanted to clear my mortgage and have enough savings to do this now. 

But I wanted to ask if I was able to pay the remaining finance on my mortgage, would it put me in a better position to re-finance in the future, should I choose to ?

Thanks

 

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I guess it depends on your risk appetite and plans for the future. You have to weigh up the benefits of repaying the mortgage (e.g. security, no further repayments) against the costs  of doing so (e.g. opportunity cost - what else could you use the funds for, can you invest in something that might exceed your current mortgage rate?).

The re-financing query is probably a query for your broker, will depend on your circumstances and financial position at the time you wish to draw down the funds. Will you still be in employment? What lenders will be available?  What will you be using the refinanced funds for? 

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5 hours ago, Therealhyper said:

hello all, 

I am unsure of what the future holds so wanted to clear my mortgage and have enough savings to do this now. 

But I wanted to ask if I was able to pay the remaining finance on my mortgage, would it put me in a better position to re-finance in the future, should I choose to ?

Thanks

 

It won't make any impact on your ability to borrow in the future

_______________________________________________________________________________________________________________________________
Vin Gupta
Property Investor and Developer
UK Property Blog: https://evolutionblogger.com/article/uk-property-articles
Travel Blog: https://soulfultravelguy.com/

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  • 3 weeks later...

Thanks to everyone for your input, very helpful!

I may buy a 2nd property, as a new home and put my current on rent ?

So IF I cleared the mortgage and later decided to buy a 2nd property, would the 2nd property mortgage have to be a BTL product ?

Or can it be a residential mortgage...?

And I assume I still pay the stamp duty for 2nd property? 
 

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If you were going to live in the second property it would be a residential mortgage but you would need permission to rent out your existing property and might at some point need to switch to a BTL

You would pay the 3% second property SDLT.

The mortgage does not affect any of this (except in an affordability check) - all you are doing is giving up any gearing you have. From a purely numbers position you are better to have a mortgage & use your money to make money elsewhere but there are other factors at play such as your level of acceptable risk.

Good luck :)

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On 1/8/2021 at 8:17 PM, Therealhyper said:

Thanks to everyone for your input, very helpful!

I may buy a 2nd property, as a new home and put my current on rent ?

So IF I cleared the mortgage and later decided to buy a 2nd property, would the 2nd property mortgage have to be a BTL product ?

Or can it be a residential mortgage...?

And I assume I still pay the stamp duty for 2nd property? 
 

The mortgage product depends on the activity in the property

  • If you live in the property, you need a residential mortgage
  • If you rent the property out, you need a BTL product
  • If you do Airbnb, you need a holiday let product
  • If it's a commercial premesis, you need commercial mortgage etc

_______________________________________________________________________________________________________________________________
Vin Gupta
Property Investor and Developer
UK Property Blog: https://evolutionblogger.com/article/uk-property-articles
Travel Blog: https://soulfultravelguy.com/

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