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Overpaying correctly ?
baggyjim
Posts: 5 Forumite
I currently have a house that I let, this has an approximate value of 130 k, my outstanding mortgage is 24k with Nationwide on their SVR which is currently 3%.
This works out to be approx £145/month at the moment but I am overpaying by £300 (£445/month).
The property I live in, we paid 250k for in June 2005, the outstanding mortgage on this is currently 122k. This is on a Woolwich lifetime tracker + 0.18 above BoEBR , so currently stands at 1.18%. The payment on this should be around £500, but we have left the direct debit at £780 plus an extra £100 standing order, so we are overpaying on this by approx £380/month.
Am I doing the right thing here or should I direct the total overpayments into one of the mortgages ? i.e pay Nationwide mortgage what is due (£140) and direct the £300 pounds overpayment into the Woolwich mortgage instead, which would make it £680 overpayment.
Thanks in Advance.
This works out to be approx £145/month at the moment but I am overpaying by £300 (£445/month).
The property I live in, we paid 250k for in June 2005, the outstanding mortgage on this is currently 122k. This is on a Woolwich lifetime tracker + 0.18 above BoEBR , so currently stands at 1.18%. The payment on this should be around £500, but we have left the direct debit at £780 plus an extra £100 standing order, so we are overpaying on this by approx £380/month.
Am I doing the right thing here or should I direct the total overpayments into one of the mortgages ? i.e pay Nationwide mortgage what is due (£140) and direct the £300 pounds overpayment into the Woolwich mortgage instead, which would make it £680 overpayment.
Thanks in Advance.
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Comments
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I would overpay the mortgage which is being charged the higher interest (i.e. the one you rent out) unless this has some kind of tax or other implications.0
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I'd OP your personal mortgage as you can get tax relief on the rented property, interest on the mortgage, therefore the larger the mortgage the more interest you are paying and the more you can offset against the rental received from the house.0
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Welshlassie wrote: »I'd OP your personal mortgage as you can get tax relief on the rented property, interest on the mortgage, therefore the larger the mortgage the more interest you are paying and the more you can offset against the rental received from the house.
Interest can be offset against the rent up to the value of the rental property at the time it was first rented. The mortgage doesn't have to be on the rental property but can be on the residential property so overpaying on the mortgage with the highest APR is the best strategy.0 -
Interest can be offset against the rent up to the value of the rental property at the time it was first rented. The mortgage doesn't have to be on the rental property but can be on the residential property so overpaying on the mortgage with the highest APR is the best strategy.
Didn't realise that, thanks, it will benefit us.
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