Clearing a mortgage

[markyb]

My mum has the opportunity to clear her mortgage and her current provider has given her the option of leaving £1 outstanding on her mortgage - why would they do this ?

On paper this sounds good as she would not have to pay for the storage of the deeds but i cannot see where the bank would make money out of this (or have banks turned into charitable organisations ?)

Also where would ownership of the property stand legally ? (she has a partner whose name is also on the mortgage so would assume he would then own the property if he paid the £1)

Am I being too sceptical about this offer from the mortgage provider or do they have a hidden agenda ?

 

[BroadSword]

If £1 remains outstanding then they still of course retain a charge over the property and hence the costs involved in retaking the security are much less / none if you wanted to reborrow against the asset. They (the bank) might think that the offer to effectively hold the deeds for free was worth it given that they would be a favoured chioce - all other factors being equal - if the customer ever wanted to redraw the debt, etc.

So it might be a marketing gamble...certainly this was the view taken by the bank I worked for 10 years ago.