which mortgage should I start paying off first

marcguy

I have 2 mortgages,

one is for 116k at a tracker rate of 0.63 above BOE rate so currently it's a lovely 1.13% and I'm being charged £115 a month interest

the Other mortgage is 100k at 5.99% for another 20 months at least. Interest on that is £440 a month

I have a little bit of spare cash under 5k, which mortgage should I take a chunk out of to save the most? I'm thinking it's the one with the higher fixed rate as long as I stay inside the mimimum repayment amount without penalty, am I right?

Matt1982

Are you allowed to overpay on each without no ERC's.

marcguy

So the amount I have I can pay on either yes.

thanks, Marc

marcguy

I could always switch the tracker whenever I want, I'm not locked onto it at all.

so which one should be paid first, tracker or fixed?

opinions4u

Okay, so you can pay off up to £10k of debt that costs 5.99% without penalty.

Or anything you want off debt that costs 1.13% without penalty.

You have £5k - so keeping it simple, it's a no brainer. Pay off what you're being charged most for.

Fixed.

Hope that helps.

marcguy

that's what I thought but wanted some confirmation as the more I thought about it the cloudier it started to get.

Muhasib

theartfullodger wrote: »

Well, last time the Conservatives got power interest rates rapidly went to 17%... and stayed about 10% for years...

As the merkins say, go figure!

Cheers!

Lodger

but what you don't say is that Labour had already more than doubled the rate to 14% in just one year by February 1979 in the aftermath of the Winter of Discontent. It was a miserable time all round and I fear will soon occur again regardless of which Party 'wins' the General Election.

dimbo61

Is the £5k all your savings ?
If so hang onto the money ( keep it in a cash ISA) as emergency funds
If not then pay it off the fixed part of your mortgage

zzzLazyDaisy

I agree, keep some money for a 'rainy day' float, and then pay off as much as you can off the FRM without paying penalties.

There's no point in aying down the tracker at the moment imo, as you can earn more interest in a good savings account, than the interest you are paying on the tracker. However if you have spare cash after paying down the FRM, then it would be a good idea to save as much as you can so that if/when interest rates start to rise, you'll have another lump sum to put down.

Gorgeous_George

Is one a BTL mortgage with potential tax advantages?

If it is, it may be worth saving the £5K.

If not, the highest rate is the one to overpay.

GG