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For home owners, paying off a mortgage is usually a long term commitment – typically lasting 25 years. Receiving that letter from your lender informing you that you have paid off your mortgage in full and your home is now completely yours can be a fantastic moment and one that can mean a celebration is in order!
However, once these celebrations have been laid to rest, it is important to take stock and consider what you should do next. Resting on your laurels can be very costly, both in monetary terms and in time. Once you have received that all important letter from your lender, here are 5 things I believe you should consider:
1. Have your security discharged: Your mortgage lender’s interest will have been registered against the title to your property by way of a standard security. This interest needs to be formally discharged.
In Scotland, this process requires a solicitor to prepare a legal document called “a discharge”. The discharge is sent to the lender to sign as to confirm that you have repaid your mortgage in full. The signed discharge will be registered by your solicitor at the Registers of Scotland which removes the lender’s interest in your property.
If you choose to do nothing at this stage, you may experience problems if you try to sell your property in the future. Your sale will not be able to proceed until your solicitor receives confirmation from your old mortgage lender that they will agree to sign the discharge. If some time has passed since you repaid your mortgage, you may discover that the lender has closed your mortgage account and is unable to trace your records to confirm that the mortgage has been repaid. Your lender may have even amalgamated with another lender to add to the confusion!
2. Check your building insurance: It is important to keep in place your buildings’ insurance cover over your property. If your insurance payments are included in your monthly mortgage payments, you should check that your insurance payments are still being made. You don’t want to discover that your insurance has been cancelled!
3. Consider reviewing your Will: Paying off your mortgage marks a significant end point to a fairly large investment. I would recommend that this would be a good time to review your Will, or if you don’t have a Will, consider having one written.
Having a Will ensures that you leave your estate – including your property – to exactly those you want it to go to. By not having one, there will be a delay in settling your estate and your family will be uncertain as to whether they benefit or not. These processes can be costly and time consuming. Now that your mortgage is paid off, this can act as a prompt for you to tie up other matters.
4. Consider reviewing other financial assets: After paying off your mortgage, you may have additional monthly finance that you don’t know what to do with. Do you place these funds into an ISA? Or into a pension? Now is a good time to discuss your options on what you can do with these additional funds.
5. Celebrate!: Paying off a mortgage is usually a long process – you should definitely consider having a celebration!
At Blackadders, we have a full service team who are able to assist with all of these issues, including property, Wills and wealth management matters. If you have any questions, please do not hesitate to contact a member of our team who will be able to help you.
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