So you've made your last payment on the home loan and forked out for the mortgage exit fee – your debt is done... isn't it?
Unfortunately, maybe not, as there is no guarantee your bank or building society will tie up all its loose ends. In particular, some lenders are slow at getting their name taken off the title deeds at the Land Registry and in relinquishing their "interest" in the property. If this isn't done, there's every likelihood that the problem will go unnoticed until you decide to move home – at which point it will delay the sale, costing time and money.
According to Lisa Shenton, a partner with law firm Irwin Mitchell, mortgage lenders failing to discharge their interest in a home account for "30 per cent of post-[sale] completion delays". Likewise, Sheetal Bahal, head of residential property at legal firm Clarkson Wright & Jakes, says she often comes across title deeds where previous lenders are listed. "Yet the client tells you they paid off the mortgage 10 years ago."
That many smaller len- ders no longer exist, having been gobbled up by bigger players, only compounds the problem. "If you've got to track down a lender that was once a building society and work out who owns it now, that can take up a solicitor's time and cost the client money," warns Ms Shenton.
"If they're charging a mortgage exit fee, they should be doing the work promptly and dealing with all the admin. But in some cases, lenders are not discharging their interest in the property."
But Sam Bennett, spokeswoman for City regulator the Financial Services Authority (FSA), says: "There's no definition of what the exit fee covers – that's down to individual lenders."
Closing down a custo- mer's mortgage account is simply a case of filing the proper paperwork with the Land Registry, but still some lenders are failing at it. "One problem is a lack of knowledge or training in some departments," explains Ms Bahal. "Once the mortgage is paid, someone sends the title deeds out – but without checking if anything else needs to be done." She cites the Woolwich as being particularly lax.
In response, the Woolwich says it has switched to a new electronic system under which the Land Registry is automatically advised to "discharge" any interest in a property once the final payment is made. This is included as part of the bank's £275 exit fee.
But the varying processes among lenders can be confusing. Nationwide says that, as part of its standard mortgage redemption procedure, it completes and issues the relevant form to the Land Registry to confirm it has no further interest in the property. Britannia, though, will close down a customer's mortgage account but retain the paperwork and title deeds – meaning that, on paper at least, it appears to retain an interest in the home.
So what's the advice if you don't want to find your lender lurking in the background? "If you're paying off your mortgage, you should be chasing your lender for forms DS1 and End1, so that you can ensure their interest in the property is relinquished," says Ms Shenton. "And keep chasing – don't think that because you've made the last payment, the account is clear."
If you do face a delay in selling your property because of a previous lender not discharging its interest when the mortgage was cleared, the FSA's advice is first to contact the lender and then, if necessary, complain to the Financial Ombudsman Service (FOS). David Cresswell, spokes-man for the FOS, says it can often intervene in cases and ensure details are changed or corrected free of charge.