easier to get mortgage if existing mortgage?

[birdman]

Thinking about paying off the last 20K of my tracker mortgage but wondering whether having an existing mortgage would be any advantage in getting a new mortgage in a year or so. Family has grown in size so likely that I will need to trade up to a bigger house. For example, from the point of view of getting mortgage approval, is it better to have a deposit which is 20K larger against a new property?

Maybe I should 'reduce' but not 'clear' the mortgage?

I'm aware of the issues around tracker vs deposit.

 

[Laughahalla]

From speaking with a couple of banks lately they all seem to want a deposit more so than the current mortgage paid down. Which was a bit of a surprise as I was overpaying my mortgage. I've stopped this now and am putting money into saving for a deposit.

 

[Macstuff]

Hard to say, it probably differs from bank to bank. I see a couple of relevant and maybe conflicting points.
- Having a mortgage will mean you have monthly repayments. That leaves less disposable income per month to pay your new mortgage. That will count against you.
- Clearing it increases your disposable income, but reduces your deposit.

For the banks it'll come down to the size of your deposit and your disposable income.
- How much would your deposit be, percentage wise, if you clear/don't clear the mortgage?
- How much disposable income would you have after paying your mortgage if you clear/don't clear it?