Mortgage Overpayments

ackoman

Hello all,

I've got two mortgages, one on a flat which I rent out, and one on a house which is the marital home.

Since interests have tumbled, we have gone from just breaking even on the flat to making a clear £300 a month profit.
I am contemplating reinvesting this money as mortgage overpayments, however I was wondering whether it is best to overpay on the flat or on the house.

The loan amount on the flat was £127,300, and is on a base rate +0.49% full term tracker (still about 30 years left on it).

The loan amount on the house was £220,000, and is currently on a 6% fixed rate (for another 2.5 years). There is also about 30 years left on this mortgage.

There must be a reason why overpaying on one property is better than the other, but I do not understand enough about mortgages to work out which one is better - any one have any thoughts? Or maybe I should split the £300 and overpay on both properties?

An additional, but related question: Any profit we make as a result of renting the flat is taxable, but costs such as those for repairs or decorating can be offset against the profit. If the £300 was reinvested in the flat as a monthly overpayment, would this be offset? Or would the taxman still want his slice?

Many thanks in advance for any advice,

Ackoman