Pay daddy back or overpay on the mortgage?

jemjem321

I borrowed £30k a few years back and the idea at the time was to pay dad back this money when I moved from flat to a house in five years (from 2006) time. I only have 2 years left on my current rate mortgage before i need to look for a new deal. Dad re-mortgaged to lend me the money so i pay him back at his mortgage rate but its only interest only!
Since i moved into my home (3 yrs ageo) i have now have money spare to over pay (payrises), but how is the best way to do it?
Interest rates on savings isnt very good at the moment, do i overpay on my interest only mortgage to reduce the capital monthly, or pay dad back so i dont have to remortgage in 2 years, the value of my own mortgage plus his 30k??? arggghhh what to do

mrcow

Pay your father back asap.

Then start paying back the capital on your property.

Voyager2002

What rate of interest does your father's mortgage charge?
What rate of interest do you pay on your mortgage?
Would you face any penalties for over-paying your mortgage?

Treadmill

Sitch your interest only mortgage to repayment if you have got surplus money, your Dad can probably wait as its not actually costing him anything.

jemjem321

my current mortgage rate is 5.39 %(fixed til jul 2011) and the loan from dad is something like 2. something %. (variable "% above base rate) No penalties for overpayments.

I am not sure paying dad back will be the best way forward as i am sure that when i come to remortgage in 2 years to get new deal, the rate may well have gone way up. If i switch to repayment from interest only then, then i am trapped into paying set amount each month, if i just over pay, if i cant pay one month or more then i just dont pay.
At the moment i dont have enough equity in my property to pay dad back if i remortgaged, what if this is the case in 2 years time? Dad doesnt have long left on his mortgage so i only have 5 years to pay it back.
I am trying to work out the best way financially. Also if i pay more of my mortgage then when my current deal ends it may look like i have more equity in my home, so entitle me to a better deal?

Pssst

You have a moral duty to agree a payment plan with dad i.e x pounds every month. Start doing it NOW.