What Happens When You Pay Off Your Mortgage?
Paying off your mortgage can bring a sense of pride and achievement. The main implication of this is a pretty huge one: you own your home!
Assuming no other mortgage lenders or parties have a stake in it, you will have paid off your mortgage and be ready to take the final steps in establishing ownership of your property.
What do these final steps entail?
Now you no longer have monthly mortgage payments to make, you will receive some paperwork to complete. Your mortgage lender will write to you with a copy of your title deeds and a closing statement letter to confirm you have repaid your mortgage in full.
You may also have to pay an ‘account fee’ if you had any deferrals in your mortgage term, and there may also be an ‘exit fee’ so your mortgage lender can take care of any necessary admin work.
If you haven’t received any documentation from the mortgage lender, be sure to contact them and request confirmation that your mortgage has been paid in full and that any charges on your property have been removed.
Another thing to be aware of are any third parties linked to your mortgage such as home insurance. Be sure to inform them you have paid off your mortgage and no longer owe the mortgage lender any money.
Moreover, check that you have cancelled your direct debit to ensure you’re no longer sending money to the mortgage lender, and finally, check your credit history to make sure there are no outstanding fees on your mortgage balance, as this can affect your ability to get a mortgage or another form of credit in the future.
Your options now
With the paperwork out of the way, you’ve just freed up a big chunk of your income.
There are so many options available to you now, and you may be wondering what is the best path to take?
Well, let’s take a look at a few of them below:
You could consider establishing a buy-to-let portfolio, if property investment is something that interests you. You can generate capital growth with your money as property value increases and you’ll earn extra income as increased demands for property means there will always be tenants who will pay rent.
Got a student loan that needs paying off? Maybe a credit card debt you’ve been putting off? Why not start paying them off now and lower the amount of interest you pay over time?