Overpay mortgage or Loan?

poppilicious

We currently owe around £22k in a personal loan at 5.9%
and then have a mortgage of around £113k at a lower rate (mixed at around 75% at 3% and 25% at 5%)

With the fall in the mortgage rate we can afford to pay off an additional £100 per month, but wasn't sure if we should be putting it towards the mortgage or the loan.

Both payments will be locked in (ie we wouldn't be able to get it back out) but there are no penalties for early repayment on either.

My first feeling would be to pay off the loan as it has the higher interest rate, but all the boards seem to say that first priority is to pay off the mortgage.

Any advice is gratefully recieved.

Thanks
Poppy

HelzBelz

Pay more towards the loan, it's got the higher interest rate

Jonbvn

Always pay the highest interest debts first, except if you are in financial trouble.

Welshlassie

I've never seen anywhere that has said first priority is to pay off your mortgage when you have other debts.

Always pay off the debts with the highest interest rate first. It will save you more in the long run.

Jonbvn

Welshlassie wrote: »

I've never seen anywhere that has said first priority is to pay off your mortgage when you have other debts.

The only time where it would be better to pay your mortgage is when you are in financial trouble, and you may get repossessed. Unsecured lenders cannot repo your home.