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Settling your Mortgage
We will shortly be arranging to redeem your mortgage. There are some points which you will need to consider.
You should keep up payments on the mortgage until it has been redeemed, but then be ready to cancel any future payments. Mortgage companies calculate these things in different ways, but redemption figures will be based on the assumption that you maintain payments, and a failure to keep up to payments can cause serious difficulties.
It is not uncommon for us to receive a small repayment once a mortgage has been redeemed.
How many different accounts are secured by the mortgage? In earlier times, a mortgage would secure only one account and the repayment of that account would be enough to discharge the mortgage. You must tell us about each of the accounts you have with the lender so that all indebtedness can be repaid.
The standard situation is that there is just the mortgage to repay. There may also be, for example, life policies which are noted as deposited with the lender, but of which the deeds will say nothing. Is there any such policy?
Please note that for some types of account the lender will require us to pay all the net proceeds of sale to them, and they will then appropriate an amount agreed with you to repayment of the debt. If this might happen, we need to make very clear arrangements with you and with your lender should we need any of the proceeds of sale, for example, on a purchase.
It would be helpful when deciding to sell the property to obtain a redemption figure from your lender, and to let us have a copy, so that you and we can together provide a provisional budget for the transactions involved.
Sometimes lenders will ask us for your new address if you are moving house. We will not normally give this without your explicit consent. Please tell us if you wish us to pass on your address.
The household insurance may be linked to your mortgage. Will you please be clear with us as to what has happened to the house insurance. If the house is being sold it will no doubt need to be cancelled. We will then sometimes receive a rebate of insurance premium.
Depending upon the amount to be repaid, it is now more common for us to repay your mortgage by direct transfer between bank accounts. There will be an additional charge, both for the additional work on our part, and also one made by our bankers. This additional charge however will often be rather less than the additional interest charges which arise if we repay the mortgage by a cheque sent in the post to the lender. We will normally repay the mortgage in this way since this also avoids difficulties with adjusting interest for any anticipated delay in payment.
Mortgage accounts are also often secured by the deposit of life, or endowment, policies. Will you please be clear with us what is to happen to such policies after the mortgage has been redeemed. Sometimes it will be needed on a subsequent purchase, but by no means always.
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