If you’ve found your outdated mortgage documents while sorting through your old paperwork, you may be wondering if it’s worth keeping them anymore. While it’s often a good idea to keep a hold of some of them, you may not need to store all of them – but which documents can you safely get rid of?
Should you keep your mortgage refinancing documents?
Mortgages can often come with quite a lot of paperwork – not all of which may be useful to you in the future. Because of this, it can often be a good idea to sort through what you do and don’t need before taking the plunge and scrapping the lot. However, most find that it can be quite hard to decipher which ones are actually important.
Generally, anything relating to your refinancing agreements should be kept safe for at least three years – although it may not be a bad idea to hold on to them for longer. In fact, many experts recommend that this type of paperwork be kept for up to 10 years.
The reasoning behind this is that you might have use of it in the future and, if you ever need to refer to it for any reason, you’ll probably be glad that you’d kept it.
What about your other mortgage documents?
In most cases, it’s often wise to keep all of the contact papers relating to the property’s purchase, as well as the original loan, for at least the duration of the mortgage.
It might also be a good idea to keep in mind that mortgages can often come with tax implications, and that certain documents might be needed for at least the first three years (from the date of your return) to provide evidence of your income, deductions, and more. If you failed to file one of your tax returns for any reason, it’s often a good idea to keep these types of documents safe.
If you have any other paperwork that’s associated with the home loan, keeping it for 3 to 10 years is often a good idea, just in case you need to refer back to it at any point. Generally, monthly statements only really need to be kept for a few months.
It can also be wise to keep a hold of any records of large-scale home improvements; from a full renovation, to a new room. Additionally, records of expenses you’ve made when either buying or selling (e.g. an estate agent’s fees or legal fees) are often worth holding onto, to calculate your capital gains.
What are capital gains?
Capital gain is the term used for a profit that is the result of selling something for a higher amount than the purchase cost, and is calculated by the difference between the original value of the property and the sale price.
Often, you can use some of your paperwork to determine how much profit you’d make on your property if you were to sell it – and if you ever plan to see your home, these documents can come in handy. It’s typically best to keep in mind that any home improvements and expenses involved with the sale of the property also add to the original price of the house.
In addition, keeping the paperwork and records of this can often help you to reduce your capital gains tax, too.
What to keep while you still have a mortgage
If you still have a home loan, there are a few things that it can be a wise idea to keep a hold off until the end of the mortgage.
These are the deed, mortgage and promissory note, and closing disclosure. Additionally, storing the purchase contract and seller disclosures, home warranty, and home inspection report for this duration can be a wise idea, too.