Overpay which mortgage? Advice pls!!

ManicMum

Hello. Wondered if you kind souls could advise me as having mental block.

I have a residential mortgge 5.49% (£111,000) fixed until July this year. I also have a BTL mortgage which is a flexi mortgage and interest rate is about 4% and I owe £138,000 on that one - it's interest only whereas residential one is repayment. I decided to use the excess between rent received on my BTL and the mortgage payment to start paying off extra on my resid loan. My reasoning on that was that BTL looks after itself and not looking to change mortgage at moment, whereas will be looking for new mortgage on resid at some point in next year and makes sense to reduce Loan to value in view of reduced property prices.

I know it may sound daft and obvious but is that the right way to do it? Just wanted to sound out the logic in case making glaring error!

Thanks moneysavers. Much appreciated.

Welshlassie

Do you have a buffer saved should the BTL not have tenants?
Have you taken into account any maintenance, gas safety certificate, landlord insurance, tax etc you will have to pay for?
Do you have emergency 3-6-9 months worth of income saved?
If you have all the above considered and accounted for then, yes you are doing the right thing.

Gillybean

I'm similar to you, have a residential mortgage and a BTL, although both are repayment in my case.

I figure the same as you, the BTL can just keep ticking over. The LTV is still good, we have funds for if its empty (but have been lucky enough to have the same tenant for over 4 years now), we have our rainy day fund. So we decided the main focus should be on clearing the residentail mortgage as our own home will always be the most important and the one we want to feel secure about.

littlemrtinkle

pay off the higher interest rate

dimbo61

As you know you can put the IO mortgage payment against the profit you make from renting out the BTL property so you are right to pay any extra off the residential mortgage.
Ensure you also keep an eye on the Loan to Value of the BTL property as you may need to reduce the mortgage to get the best deals.
Some good 5 year fixes at 3.99% out at the moment start looking now ! GOOD LUCK

ManicMum

thanks guys. that's helped me to clarify that I am on the right track.

furndire

Who is offering 3.99 fixed, please?