A mortgage & a loan - What to pay off first.?

RebeccaB_2

Hi,

I have an outstanding loan of about £800 left which ends in august.

Not long ago we took a 20yr mortgage, and took £2200 extra for a few things (french doors, new kitchen etc).

Now we have about £890 in our ISA which is left from the mortgage extra, and about £1200 tied up in savings at the moment.

We want to pay the £890 back off the mortgage, but also clear the loan.

Outgoing for the loan is £269 a month.

Do we take the mortgage cash and clear the loan, then pay the extra £269 a month off the mortgage, or do we wait and run then side by side until august.

Mortgage was for £37,800 with £2,200 extra at 6.08%
Loan was £8,000 3.5yrs ago at 8.5% for £269 a month.

Mortgage payment is £296 a month, so nearly as much.

Choices, Choices..

Tixy

Hi Rebecca

Does your loan allow overpayments and does it have an early repayment charge? If so you need to know how much this will cost you to compare your options. Also are you allowed to make overpayments on your mortgage? some mortgages allow overpayments but only up to a certain level.

You could have a look at the snowball calculator to consider your options - the link is below
http://www.whatsthecost.co.uk/snowball.aspx

RAS

Hi

If you can repay your loan, then that is the much better option. Cna you over pay? What s the early redemption penalty?

Borrowing £8k at 6.08% over 20 years is a very expensive option.