Woolwich Mortgage - Which part is best to pay off first?

Blade3

Please help with my questions below , all replies comments welcome

We have a Combined % Interest Only & Repayment Mortgage with
7 years left

Outstanding Balance = £42.5k of which
% Interest Only = £29.5k
Repayment = £13k

Current % Rate = 0.79%
Current Monthly Repayment = £170

If we were to make extra additional injections into the mortgage, say for example of £10k ...

Of the Outstanding Balance ..
Which part is best for us to pay off first?
Which part is costing us more to borrow ?
Which part is best for us to put in extra injections into ?, the % Interest only part ? or Repayment part ?
Which part would reduce the Monthly Repayment more ?

thanks everyone & much appreciated :T

CloudCuckooLand

As long as the interest % is the same, and the method of interest calculation, i.e. daily or monthly, is also the same, it will make no difference.

More likely, is the possibility that you may fall foul of the Terms and Conditions which will cover the extent of overpayments allowed per month/year, possibly even an Early Repayment Charge depending on when the deal was arranged/T&Cs.

If you really want to maximise your money, while the % rate is so low, you'd be better off putting £10k into ISAs and savings accounts. Earning anything above 0.79% after tax would be more efficient. When the interest rate creeps up to match your savings rate make the overpayment then.

And/or, consider converting the IO to Repayment, so you don't have to find future lump sums.

motch

Blade3 wrote: »

Please help with my questions below , all replies comments welcome

We have a Combined % Interest Only & Repayment Mortgage with
7 years left

Outstanding Balance = £42.5k of which
% Interest Only = £29.5k
Repayment = £13k

Current % Rate = 0.79%
Current Monthly Repayment = £170

If we were to make extra additional injections into the mortgage, say for example of £10k ...

Of the Outstanding Balance ..
Which part is best for us to pay off first?
Which part is costing us more to borrow ?
Which part is best for us to put in extra injections into ?, the % Interest only part ? or Repayment part ?
Which part would reduce the Monthly Repayment more ?

thanks everyone & much appreciated :T

wow thats one nice low interest rate. Is it the bank of England base rate + 0.29% tracker ? I'd try and put any spare money into savings while the base rate's so low, as CCL says. Although i'd keep it IO while the rate's so ridiculously low (as long as you have the will power not to blow the savings made)

Blade3

Thanks for your helpful answers CLC , Motch

The % interest is the same for both parts make no difference.

As far as I can see there is a one off charge of £38.50 for early repayment in and we can make overpayments if we wish to we were told so no restriction

Fantastic idea on the ISA , it would be more efficient then make overpayments -
CLC - which part would you suggest making overpayments into first ?

This is was originally an endowment mortgage which we changed and is linked to a SW fund which should pay the IO part at maturity

Would you think it is still sensible to convert the IO to repayment in my case ?