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Mortgage Overpayment - Repayment or Interest Only?
jicms
Posts: 488 Forumite
I have a £220,000 base-rate tracker mortgage with 5 yrs left. It is split between £200k interest only and £20k repayment. I would like to overpay by leaving my payments the same after the base rate reduction.
Not sure if I'm asking the obvious but the bank won't advise me. Should the £200 reduction in my payments be paid towards the interest-only or the repayment part of the mortgage to make the best saving??
Not sure if I'm asking the obvious but the bank won't advise me. Should the £200 reduction in my payments be paid towards the interest-only or the repayment part of the mortgage to make the best saving??
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Comments
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It doesn't matter, its all coming off the same debt. By default, you're paying off ALL the interest each month, plus a bit of capital. With an overpayment the only thing left to pay off is the capital, as you're already covering all the interest that's owed.My Excel Mortgage Calculator Spreadsheet: http://forums.moneysavingexpert.com/showthread.html?t=11571730
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Thanks for that and sorry for the belated reply.
The other question is as my tracker mortgage is now only 1.88% it's probably not a good idea to pay any off from savings which I have fixed at 4% and 7%?0
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